The University of California has decided to divest $475 million worth of contracts from Wells Fargo after steady criticism from student campaigns against UC’s investment in the bank. Outcries began late in 2015, pushing the UC to withdraw its investments due to Wells Fargo’s shares in private prisons and the controversy surrounding the bank’s faulty commission incentive program.
Though the UC released no formal statement, the Afrikan Black Coalition (ABC), a UC-wide student organization that advocates for UC’s black student population, announced the divestment on its website. ABC played a pivotal role in getting the UC to withdraw funding for the bank by speaking against the investment and meeting with senior UC administrators and their staffs.
“By taking a stand against the amoral practices of an enormous corporation like Wells Fargo, the Afrikan Black Coalition is pushing the UC to exhibit the kind of leadership necessary for the survival of communities unfairly targeted by a criminal financial system,” according to ABC’s statement.
The UC Office of the President director of media relations Ricardo Vazquez confirmed UC’s decision to divest from Wells Fargo.
“UC believes that suspending our investment banking relationships, in tandem with the state treasurer, and unwinding some of our credit relationships, were appropriate actions to take in light of the bank’s activities with respect to unauthorized bank and credit card accounts,” Vazquez said in an email.
The divestment is not an end for the UC’s ties with the bank. “It’s important to mention that the UC didn’t end their relationship with Wells Fargo,” Vazquez said. “We ended one relationship with Wells Fargo as a credit provider and another as a commercial paper dealer.” The UC issued $25 million worth of short-term debt bonds, known as commercial paper, to Wells Fargo. They terminated this contract in November 2016 after a campaign by ABC.
ABC’s initial efforts in 2015 succeeded in getting the UC to divest almost $30 million from private prisons. ABC’s position against mass incarceration stems from the disproportionate rate at which people of color are incarcerated.
Wells Fargo is a major financer of CoreCivic, formerly Corrections Corporation of America, and The GEO Group’s corporate debt. A syndicating agent for CoreCivic, Wells Fargo also holds shares in The GEO Group, which operates prisons and immigration detention centers around the world.
The new announcement outlines the divestment of a $150 million interest rate reset contract by April 2017. This will be followed by a $200 million divestment of the $300 million credit line — the maximum loan balance agreed upon by both parties — UC has with Wells Fargo by next month. UC will make a final divestment of the remaining $100 million once a substitute bank is found. The search for a substitute is currently underway.
The divestment is also seen as a victory for the efforts of other student-run groups across the UC campuses. Wells Fargo is a top investor in the Dakota Access Pipeline, an oil pipeline running from North Dakota to Illinois that sparked protests across the country in the past year.
Kate Orchard, third-year UC Santa Cruz student and organizer with the student-run UC fossil fuel divestment campaign, Fossil Free UC, sees the change in the attitude of UC regents as encouraging.
“Divestment is an important way to influence the way our systems work,” Orchard said. “It’s great to see that our institution took that step in changing the prison system.”
Despite the divestment, the bank is optimistic about its relationship with the UC, according to an email from Yahaira García-Perea, Wells Fargo assistant vice president of corporate communications for Northern and Central California. García-Perea stressed Wells Fargo’s commitment to its client, writing, “We stand ready to provide [the UC with] vital support in the future.”
The email went on to distance Wells Fargo from associations with The GEO Group and CoreCivic adding, “People who want to change [the prison industry] should address their concerns with the appropriate government officials. Wells Fargo is a bank.”
ABC continues to encourage Wells Fargo to divest from private prisons but sees UC’s decision as a first step, writing, “This is an unprecedented move that can shift the landscape of not just California, but the nation.”