St. Pete City Council opts to renew Bank of America contract
The City of St. Pete will continue depositing its money into a Bank of America account for at least another year. The 5-3 decision came after council member Steve Kornell complained the bank isn’t being a good corporate partner.
A citizen recently complained to Kornell that Bank of America is breaking some terms of the National Mortgage Settlement. The $25 billion agreement protects homeowners from being foreclosed on if they are trying to secure a loan modification. It also creates other rules which make dealing with banks easier for customers.
“It concerns me that we’re giving, on one hand, hundreds of millions of dollars worth of deposits and then on the other hand, some of the actions that are happening are causing us to have to do all kinds of housing programs and creating economic instability in our city and all those kinds of things.”
“Can we verify that there was a settlement with 5 major banks where they paid….
“we’ll do that in a workshop”
“$25 billion? Oh, so that’s not part of this? Even though I asked for it at agenda review? Ok. We’re going to refuse to do that? Can we put a date on the workshop? I mean is there some concern that there’s urgency when people are losing their houses? Is there any urgency to that?
The contract with Bank of America expires at the end of April. That didn’t leave the board with much of a choice. Anne Fritz is the city’s finance director.
“Every activity that is through the city goes thorough that depository account, every piece of payroll. We have significant automated operations both on the revenue side and on the disbursement side so that if we had to break our relationship with this financial institution that the city business would probably come to a halt. We wouldn’t be able to pay our employees, we wouldn’t be able to pay our vendors, we would not be able to receive our revenues from the state.”
The last-minute contract renewal was pulled from the city council’s consent agenda where items are typically approved all at once and without conversation.
“We’re kind of faced with what we lawyers call a Hobson’s choice which in straight forward language means no choice at all.”
That’s city council member Charlie Gerdes.
“I don’t want an automatic renewal to come up two weeks before the deadline. That’s just not right. We have no choice.”
Also at issue was whether or not the city should shift toward banking locally instead of using a large corporation. To do that would require the city to go through a lengthy bidding process and would sop up staff resources. Despite the potential time and financial investment, the board unanimously agreed to workshop the issue within the next month. David McKalip, who is running for city council in November, urged the board to give local banking a close look.
“I don’t know why you would have your money in this big federally controlled, federally bailed out monstrosity called Bank of America. They are not good citizens of the community. They have sinned in many ways and this is the latest. When you have a local bank, the money stays in the economy and you can have some sort of control over how that money is controlled. It shouldn’t be politicized but it is accountability when those contracts are renewed. And when you’re going to workshop this, I hope that you don’t just have the Bank of America people there with their talking points. I hope you have some local banks talking about what they can do for the community. I hope you have some citizens who have been hurt.”
And city council chair Karl Nurse said whoever the city banks with should be held to a set of terms decided by the board. He suggested that local banks might be preferable in some instances.
“The big banks won’t do bank loans – won’t do mortgages that are as small as the price of the properties. So, 90% of the houses in midtown in Child’s Park you can’t get a mortgage on from a big bank because their minimums are higher than that. But, my point is, when we come up for renewal that is an opportunity to begin to have those conversations and often cities, as a result, are able to negotiate terms that include not only what does it cost the city, what does the city get for it?
If city council members decide to start the process of ditching their big bank for a smaller one, they will only be able to choose from local banks. State law currently bars local governments to make deposits at credit unions. Bills in both chambers of the Florida Legislature this year could change that. Staff members for the City of St. Pete estimate it would take about a year to find a new bank.
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