Issue

In response to community concern about foreclosure and community reinvestment activity, the students of KWOC are currently requesting Macalester sever its ties with Wells Fargo.

Response

Macalester’s relationship with Wells Fargo is actually quite limited, and therefore an easy one to move. While the amount of our money might not be extremely significant to one of the country’s largest banks, it would mean a great deal to a local bank and would take a symbolic stand against a bank that has torn apart our community. The college’s purchasing card program has been the focus of this discussion.

We are confused about administrators’ understanding of Macalester’s power to influence Wells Fargo’s lending practices. They claim our business is so small that moving our money would not make an impact, while simultaneously expecting us to believe that the same amount of money gives us the leverage to meaningfully influence bank policy through a weakly worded letter.

Process

We recognize and appreciate the effort that David Wheaton and Kate Walker have put into working with us. We enjoyed getting to know them through this yearlong process. However, the administration’s decision combined with their disregard of the evidence we offered proves that the process was built to maintain the status quo.

Evaluation

Our evaluation of the situation is as follows:

Emphasizing the complexity of the problem obscures the solutions that are needed right now. While there are many moving parts to this issue, there are a few key players who made the biggest decisions that had the most negative impact. Now we have the chance to influence their decisions for the greatest good.

Wells Fargo was responsible for at least $51.8 billion in subprime loans, not including the loans it acquired through its merger with Wachovia. Wells Fargo—Wells Fargo Financial specifically—targeted predatory loans at low-income communities of color. Securities created from these subprime loans contributed to the economic collapse from which the world’s economies have yet to recover (Center for Public Integrity).

Rather than speculate on Wells Fargo’s desire for bailout funds, we focus on the $25 billion they received with the agreement that they would help the economy recover from the devastation they helped cause. Instead, they’ve continued making record profits.

In the two hardest hit zip codes in the Twin Cities, where 13 schools closed, millions of dollars were extracted, and thousands of families were made homeless, Wells Fargo has only reissued ten loans (Neighborhoods Organizing for Change).

It is true that the individual homeowners in OccupyHomesMN run campaigns against many banks, but our campaign is about joining community groups who recognize Wells Fargo as the worst actor in the state. Minneapolis Public Schools recently ended their relationship with Wells Fargo for this reason. We are discouraged that administrators prioritized secondary Internet research over firsthand testimony from community members who provided the administration with detailed research and firsthand testimony.

In the meeting that the administration initially canceled before moving it to a later date, a Macalester alum provided stacks of professional research from groups like the United States Government Accountability Office, ISAIAH, Jewish Community Action and Northside Community Reinvestment Coalition, which detailed the severity and destruction of Wells Fargo’s practices as well as why our demand would be meaningful. David Wheaton left the reports sitting on the table.

Because they’re the largest mortgage provider in the state, Wells Fargo can make the biggest impact through common sense solutions like principal reduction. Principal reduction resets underwater mortgages to current market value. For Minnesotan homeowners who currently pay more than their home is worth in mortgage payments, principal reduction would save an average of $350/month on their mortgage payments. This would create thousands of jobs and help replenish the local tax base (Minnesotans for a Fair Economy).

Size and scale unequivocally bring the weight of responsibility. Part of why no one seems to have reliable data is because Wells Fargo has deliberately concealed the details of what happened from government review and public access through legal settlements. Regardless of how Wells Fargo’s impact is related to its size, what we’re concerned with is its impact, and its impact has been devastating.

In our conversations with Wells Fargo representatives, they claimed they could not implement principal reduction without changes by Fannie Mae and Freddie Mac. Community leaders also informed administrators that Fannie Mae and Freddie Mac similarly deflect blame. In reality, both actors have the power to come together and implement pragmatic solutions to the ongoing crisis.

For example, eight states have “Hardest Hit” programs in which banks including Wells Fargo implemented principal reduction on Fannie Mae and Freddie Mac mortgages. Wells Fargo representatives admitted that this would not have happened without “significant political pressure.”

That is why communities across the state have come together to create unified pressure against Wells Fargo through actions like cutting contracts. Cutting our Wells Fargo contract aligns us with our community and with Macalester’s values. Inaction demonstrates our compliance with their unjust practices.

While we respect that Wells Fargo funds charitable organizations in the Twin Cities, we are focused on creating systemic change in response to the systemic issues that they’ve helped cause. While many of us have volunteered with Project for Pride in Living and Habitat for Humanity and respect the work they do, our issues with Wells Fargo policy cannot be erased by charitable giving. It should be noted that Sunrise Bank is also an active partner in charitable projects in our community, pledging to give five percent of their pre-tax income to the community through volunteering, in-kind gifts and grants. More importantly, their record of community investment is stronger than Wells Fargo.

We understand the restraints of the banking system, and that’s why we looked for a logical solution that would have a meaningful impact. Corporations have made significant changes in response to pressure from colleges and universities. This pressure is always targeted at the worst player because that player can do the greatest good by changing their practices, and it has the power to set a new standard for the industry.

Therefore, the fact that Sunrise Bank runs their platform through a US Bank wholly owned subsidiary is irrelevant to this cause. The administration should not be so idealistic as to think Elan’s affiliation with US Bank detracts from the impact of supporting a local banking institution. Macalester’s business is important for Sunrise, and the fact that they use the Elan platform only means they can safely handle our business. Through this solution we get the best of both worlds: a great business partner, and a demonstration of commitment to our community as informed by Macalester’s values.

Summary

We understand that it is always easier to give more weight to the status quo than to be a leader in making meaningful change, but the current status quo is unacceptable. The status quo looks like thousands of homeless in our community and neighborhoods drained of wealth.

This process ended with a resolution that failed to respect our community’s call for us to stand with them. In making this decision, the administration has passed up an opportunity to be leaders in social justice. This opportunity remains possible and we remain committed to demanding that Macalester uphold our values by cutting the contract and supporting a community bank.