Support Brews in Worcester for Big Bank Battle

Wednesday, May 30, 2012

Walter Bird Jr., GoLocalWorcester Reporter

One city councilor’s quest to wean the city off its dependence on big banks has some supporters, and his colleagues aren’t writing off the notion, although they do want more information. The City Council voted to have a report done to see if the banks are meeting the foreclosure laws and ordered the city manager to research what would be involved in order to move the money to smaller banks.

“I thought it was awesome,” District 4 City Councilor Sarai Rivera said of District 3 Councilor George Russell calling for the city to stop doing business with big banks, most notably Bank of America, through which municipal paychecks are issued. “He’s raising some important questions.”

Stop Using Big Banks

GoLocalWorcester first reported Russell’s suggestion last week that the city cut ties with big banks as long as they continue to ‘decimate’ the city’s neighborhoods with bungled foreclosures. He specifically mentioned Bank of America, through whom the city payroll is administered.

“I’m encouraging the city and businesses, but primarily the city, to stop doing business with these big banks,” Russell said. “Maybe they’ll wake up and realize they should start handling things differently.”

The City Council discussed issue during its meeting Tuesday night. Russell had an order on the agenda requesting City Manager Michael O’Brien and Chief Financial Officer Tom Zidelis “review the listing of institutions into which they direct municipal deposits to ensure that these same institutions are in full compliance with the City of Worcester protocols for bonding, securing and maintaining foreclosed properties.”

Both Russell and District 1 Councilor Tony Economou attached their names to a similar order on the same agenda, requesting a report on the city’s plan to deal with vacant lots and foreclosed homes.

City in Good Position

Among those in Russell’s court is GoLocalWorcester MINDSETTER™ Grace Ross, a local advocate and former gubernatorial candidate. Like Russell, she said the city should take its business elsewhere, preferably to smaller banks.

“The city’s assets should be moved,” said Ross. “There are some logistics, but they should be moved.”

A supporter of the Worcester Anti-Foreclosure Team and a staff member of the Massachusetts Alliance Against Predatory Lending, Ross said while Russell’s proposal lacked specifics it has its roots in previous efforts.

“Some of us have been floating the idea for awhile,” Ross said. “We believe the city is in a good position to move its money out of the big banks.”

Where O’Brien stands on the issue wasn’t immediately clear. Attempts to reach him for comment were unsuccessful.

Rules Not Obeyed

Ross said there are plenty of reasons to be wary of big banks – and more than enough evidence that the city should turn a cold shoulder to them. She accused them of not properly signing and executing legal documents and not following state foreclosure laws.

“They’ve made it clear if they think they can get away with something, they’re going to,” Ross said.

In extreme cases, she said, area banks have “foreclosed on people while they’re in the middle of negotiations with them.” In other cases, she said, people have been forced out of their homes in the dead of winter by banks that have ordered the removal of heating pipes.

That Russell singled out the Bank of America was not surprising, according to Ross, who said, “BOA has a horrendous track record at all levels, federal and state.”

No Comment from Bank

A woman identifying herself as the branch manager at Bank of America at 365 Main Street in Worcester smiled when told of Russell’s suggestion that the city cut ties with the bank. She said she did not have the time to answer any questions. She declined to provide the name of someone else who might be able to respond to inquiries and said they would not answer any questions.

Ross also mentioned Wells Fargo, an institution about which many people have complained.

“People want to frame this as being one bad player or two,” said Ross. “The problems are spread across all the large banks.”

Councilors Weigh In

District 2 City Councilor Philip Palmieri stopped short of endorsing a move away from doing business with Bank of America and other large lending institutions, saying he’d want to hear “a little more about what (Russell’s) plan is.”

Palmieri said the city already has a plan on dealing with area banks on foreclosures and said he’d like to see a report and see “whether the rubber meets the road.”

At-Large Councilor Konstantina Lukes also didn’t throw cold water on Russell’s proposal, but like Palmieri said she’d want more information before casting a vote. She also questioned the feasibility of divesting all city funds from large banks.

“I always support investing in local banks,” said Lukes. “We have millions of dollars we’re dealing with. I have to know how much we’re investing in what banks. Those decisions are not made lightly. The real issue is can the smaller banks handle what the city has? We all prefer to deal with local banks, but we have to make sure safeguards are in place to protect our investments. We’re talking a lot of money here.”

Ross called Russell’s agenda item a first step, saying, “We want more than a first step. Let’s refine the criteria for what it means to be a responsible financial player in our community.”