There’s $50,000 a year in banking fees at stake. To members of MN Neighborhoods Organizing for Change (NOC), who the Minneapolis Public Schools trust to hold their payroll account is a matter of ethics as well as money. They, along with teachers and union members, asked questions and made statements June 20 during a path-breaking public opportunity to meet with representatives of three banks the district is considering negotiating a contract.
Months ago, NOC researchers quantified the direct cost to the school district, of family homes lost to foreclosure, at about $150 million, of which they say Wells Fargo is responsible for $28 million. Each lost student represents per-pupil state aid no longer received. NOC members say big banks have contributed to the problem by not working out loan modifications so debtors can afford to stay in their homes. NOC urged the district to move its money to community banks or credit unions not involved in foreclosures.
The school district is reviewing its payroll account and purchase card (p-card) administration. According to a news release, Minneapolis Public Schools banking policies require a request for proposals at least every five years. “After completion of this process, preparation will begin on another RFP for other aspects of the school district’s banking business, specifically, accounts payable and investments.” The first recommendation would be presented to the Board of Education June 26 (after this NorthNews was printed).
Wells Fargo currently handles the district payroll account. They, US Bank and Bremer Bank are the three finalists for the payroll and p-card administration. At the meeting, Lee Strom, a vice president and regional manager in the Government Banking Division represented US Bank. Representing Wells Fargo were Jason Paulnock, senior vice president for the midwest region in Government, Education and Nonprofit Banking, and David Offord, vice president. Bremer Bank brought Jeanne Crain, president and CEO who stated she was relatively new on the job; Joe Grey, senior vice president and business deposit manager, and Leo Lopez, vice president and market manager who took the lead in answering most of the questions. Two other individuals attended on behalf of Bremer but did not speak.
At the end of the meeting, audience members were allowed three minutes each to make statements. After the public session, each bank was to go through a technical interview on their capabilities, which would also figure into the selection committee’s recommendations.
At the meeting, which ran from 8:30 a.m. and a half hour over the allotted 10 a.m. end time, these are among the question areas addressed:
How many sheriff sales has the bank been involved in, versus how many loan modifications?
US Bank said .03 percent got foreclosure notices, and about 10 percent of those got loan modifications. US Bank acts as a trustee for investor pools, and many of those transactions just follow the investor instructions. Wells Fargo said they had 1,518 foreclosures in Minneapolis overall from 2006 to 2010 and have shared the information on how many loan modifications they’d done, with the school finance department. Bremer issued three foreclosure notices, none of which resulted in sheriff sales, from 2006 to 2010.
Charitable giving and employee volunteerism policies: Wells Fargo and US Bank each give about $2 million in the Minneapolis market annually and both encourage and make it easy for employees to volunteer. Bremer bank’s donations, at $1.7 million represent 40 percent of net income. Bremer Bank is primarily owned by the Otto Bremer Foundation. Approximately 100,000 hours of volunteer time were logged in 2011 and volunteerism “is a line item on our annual reviews,” Lopez said.
Commenting later, Gerardo Cajamarca said, “We don’t need a donation, brother, we don’t need charity…we need justice.” He’s a member of the property service union at the schools, SEIU Local 26.
Officials of US Bank and Wells Fargo have positions of power within groups that have taken stands harmful to education, said askers of questions, the Minnesota Chamber of Commerce and the Minnesota Business Partnership. The representatives June 20 said these men are serving as individuals and that the corporations take no political stands. NOC researchers said Wells Fargo holds stock in a private corporation involved in prisons, and drew the conclusion that the bank has an interest contrary to education. A Wells Fargo rep said it only did this as advisor for its customers.
James Burroughs, Executive Director of the Office of Equity and Diversity for Minneapolis Public Schools (MPS) asked all of the submitted written questions in apparently random order rather than grouping the concepts as is often done in debates. Though it may have been hoped that the bank representatives would actually answer the similar but nuanced questions in different ways, for the most part they repeated their first answers.
An issue that kept coming up was the ban on transferring money home to Somalia. US Bank said they are willing to discuss this and will follow up. Wells Fargo said they are “in dialog” and can research the issue, Bremer said it is a regulatory barrier that they wish could be changed. Later, MPS school board member Kim Ellison said US Congressman Keith Ellison is working on the issue, and gave his phone numbers.
“Will you pay back” the value of the effect of your foreclosures? a couple of people asked in different ways. US Bank said, “I don’t know where that figure comes from. We are a low-cost provider to the schools. We do pay a lot of taxes on real estate we own.” Wells Fargo said that for every one foreclosure there’s another being negotiated, and they repeated that “the bank has acknowledged that we’re not perfect. We admit mistakes.” Bremer, having had no foreclosures, said the record speaks for itself.
Questions also covered what each bank does to promote diversity in its hiring: Lopez said “when I came to Bremer I was given the biggest branch, I speak to that personally,” gesturing to the rest of the table to emphasize the difference in skin color and spoken inflection. “No one at Bremer makes less than a living wage, it’s corporate policy.”
Wells Fargo said inclusion and diversity are core to corporate responsibility, there is an enterprise-wide diversity policy. “We are transparent, and when we hire our first charge is to hire internally,” to give people a chance to advance. US Bank “does the same thing.” Strom mentioned that the bank participates in STEP UP, a summer youth employment program, so youth can get into banking.
All banks were sent back to “do their homework” on stating how their corporate missions align with the school district’s mission.
From the statements:
Sunday Alabi, NOC board chair, said
“Education is the key to what we are. Nothing in life didn’t start with education. Minneapolis public schools lost $150 million” through lost population due to foreclosures. He equated loss of education opportunity to “killing people.”
A student at Macalester College said
“we have a lot of students from South and Southwest [Minneapolis high schools]. We are urging Macalester to do what you’ve been doing, and encouraging them to move to community banks.”
Rekoe Howard, a NOC member and founder of Project: Superman, cut and folded up his Wells Fargo and US Bank credit cards.
Virginia “Deoccupy Homelessness” Simson said she used to assist an executive at a big bank. She’s now homeless at age 63 and fighting to get a statewide moratorium on foreclosures.
“We need to end the cluster f–k that’s been going on for four years. Economics is a moral issue. What side are you on, as people? Don’t support people who glaze over when we talk about humanity.”