A growing number of cities have "passed, introduced or drafted responsible banking ordinances in recent months". The purpose of these ordinances is to move city money out of the large banks that contributed to 2008's financial meltdown.
The City of Davis does its banking with , which -- along with Bank of America and JP Morgan Chase – has been heavily criticized since being bailed out by the federal government.
The subject of Davis’s banking was brought up regularly as the Occupy movement gained steam and . The issue came up again recently in an open letter by local attorney Bernie Goldsmith, who also wrote on Davis Patch about the importance of buying locally.
Why does the City of Davis choose to support Wall Street over Main Street? Does anyone remember when the City Council voted to shun local financial institutions and transfer all of the city's payroll, banking, and other business to Wells Fargo? There's an election coming up. I think it's time to start asking our council to choose main street over wall street. ? ? ? I think we should go even further, and use this as the first issue that can lead us to stronger buy-local requirements for city contracts. It's time to keep track of where we're spending our tax dollars for city services, and ensuring that the money we tax from local residents and businesses goes back to local residents and businesses wherever possible.
Mayor Joe Krovoza responded to Goldsmith's note, pointing out that it would cost "much more" to change banks. Krovoza said it was important for members of the community to know that.
Considering today's financial climate and the city council's , is now a good time to make a switch that would likely cost the city more? Weigh in below.
Goldsmith said he understands that the decision came down to the hard numbers, but he questioned the overall hardness of those numbers, saying that local banks were at one point shut out of the bidding process and that one local bank even said its numbers were misrepresented. He continued in another note:
I think it is a core value of this town that we should support our local businesses, institutions, and service providers, even when it's a little more expensive. This is because we know that the value of shopping locally is not always reflected directly in dollars and cents or a bottom line; dollars spent locally recirculate and multiply more than dollars spent elsewhere, enriching businesses and government alike. This issue is deeper than a simple bottom line; it reaches to the bedrock of our community's values, and what makes Davis unique. The is a living example of the dividends this policy can bring to a community.
Goldsmith says that the current contract is flexible and that the city council should once again look into the issue.
Similar efforts are being made in other cities, including nearby Elk Grove, where activists to drop Bank of America. Churches and Unions have also taken their money out of large banks, according to this article.
What are your thoughts on the City of Davis's banking? Would you want the city to switch from Wells Fargo to a smaller local bank? What if it came at a higher borrowing cost? Share your opinion below.