The sign outside of a Wells Fargo branch. REUTERS/Jim Young
The sign outside of a Wells Fargo branch. REUTERS/Jim Young

Councilman Paul Koretz stopped short Tuesday of calling for aggressive action to punish banks engaging in “predatory sales goal” tactics, striking out language that would have called on the city to stop doing business with such institutions.

The motion by Koretz and council members Paul Krekorian, Nury Martinez, Marqueece Harris-Dawson now only asks that the city promote “responsible consumer banking by any company doing business with the city of Los Angeles.”

Earlier draft language explicitly calling for a prohibition on “predatory sales goal” incentives or tactics by banks doing business with the city appeared to have been removed shortly before the motion’s introduction.

The Committee for Better Banks, a group seeking to unionize bank workers, mistakenly issued a statement today based on an earlier version of a motion introduced by Koretz and backed by Krekorian, Martinez and Harris- Dawson.

In its statement, the group hailed the council members for proposing a ordinance that would “prohibit predatory sales goals by any company doing business with the city of Los Angeles” — even though in their final motion, the council members make no such request.

Sales goals or quotas have been blamed for placing excessive pressure on workers, especially at Wells Fargo, where employees allegedly opened fake bank accounts without their customers’ knowledge due to sales goal incentives.

The outdated language was still posted this afternoon on the committee’s website, about three hours after the revised motion was introduced.

The website stated that the “Banking with Integrity motion that was introduced by Councilmember Koretz in the L.A. City Council launches a historic effort to ban predatory sales goals in the banks that do business with the city of Los Angeles.”

Representatives for the committee who appeared unaware of the change when the discrepancy was first pointed out, told City News Service they believe the council members’ goals are still to develop policy in which the city would essentially be divesting from banks that impose predatory sales goals on their workers. They said the divestment policy could be developed through future committee hearings.

Several members of the committee today thanked Koretz, in particular, for introducing the motion.

Koretz aide Paul Neuman pointed to a  descriptive portion of the motion that says the city “should ensure that companies that wish to do business with the city of Los Angeles adhere to responsible banking practices, such as not engaging in predatory sales goals.”

However, the motion does not instruct any city departments or staff members to explore or draft language that would fulfill this goal.

Neuman said the discussion of a possible prohibition “is certain to be a central focus of the discussion when this motion” is considered by a City Council committee.

The Committee for Better Banks, formed three years ago, has been putting “a spotlight on predatory incentive programs that force them (workers) to choose between consumers’ best interests and getting paid a living wage,” and they have been presenting petitions to banks in Los Angeles and other cities demanding an “end to predatory sales goals,” according to its statement.

The committee is backed by the Alliance of Californians for Community Empowerment, Make the Road New York, New York Communities for Change, Minnesotans for Fair Economy, Jobs with Justice and local affiliates, the Communications Workers of America union and UNI Global Union.

The Consumer Financial Protection Bureau alleged last month that Wells Fargo opened hundreds of thousands of deposit and tens of thousands of credit card accounts without their customers’ knowledge or permission.

The fake accounts were set up by bank employees to achieve sales goals and reap financial incentive rewards, and the bank fired about 5,300 employees as the result of the allegations, according to the bureau.

City Attorney Mike Feuer announced last month that Wells Fargo will pay $50 million in penalties to the city and county of Los Angeles, and restitution to customers, as part of a settlement resolving litigation alleging the company opened up bank accounts without customers’ permission.

This settlement was on top of at least $135 million in penalties that the bank has also agreed to pay to two federal agencies over similar allegations.

—City News Service

Leave a comment

Your email address will not be published. Required fields are marked *