Minneapolis officials are looking to do more business with small banks, after City Council members requested alternatives to banks that invest in the fossil fuel industry.
The city won't completely cut ties with big banks such as Wells Fargo, which council members pointed out specifically in their December request because it backed the Dakota Access pipeline. But the city will make an effort to seek out smaller or women- and minority-owned firms, said Minneapolis Chief Financial Officer Mark Ruff.
Though it's more affordable for the city to work with the same large firms over and over again, Ruff said, it doesn't foster competition that would lower costs over time.
"As the world of financial institutions generally gets larger and larger institutions, then we have fewer and fewer choices," he said. "And that's not good for citizens long-term."
During 2017 budget discussions, Council Members Alondra Cano and Cam Gordon proposed that city staff report back by July on how the city could end its relationship with banks like Wells Fargo. The bank handles city transactions, helps manage some of its investments and provided financing for Target Center renovations.
In a statement, a Wells Fargo spokeswoman said the bank values its relationship with Minneapolis and wants to continue serving the city. The bank, the fourth largest in the nation, has 11,000 employees in Minneapolis.
At a committee meeting Monday, council members approved a staff recommendation to continue using cost and security as the main criteria for big financial contracts, while making an effort to award smaller banking contracts to a more diverse array of firms.
Council members in December asked staff to explore options for creating a municipal bank, but staff said there's no model a city-run bank elsewhere. The city already provides some banking services, including financing for affordable housing, and is making plans to expand them.
