Committee backs RFP language on banking social responsibility; public urges municipal bank and stronger reporting from large lenders

The Budget and Finance Committee heard an extended presentation from Treasurer Jose Cisneros and then moved to file a hearing on the city’s banking system and to forward a resolution supporting integration of community-reinvestment and social-responsibility questions into the cash-management banking services RFP.

Treasurer Jose Cisneros described the San Francisco County Investment Pool, which he said averages between $4 billion and $5 billion, and reviewed the legal priorities that govern investments: "First and foremost, safety of the funds we invest. Secondly, liquidity... and thirdly, yield," he said. Cisneros announced the Treasurer’s Office would "immediately" implement a community investment program to make FDIC-insured deposits (up to the federal insurance limit) into local banks and credit unions to provide liquidity while meeting state investment requirements.

Cisneros said the upcoming RFP will include a questionnaire asking prospective institutions about local branch and employee presence, mortgage-modification participation, foreclosure experience, small-business lending, contracting practices, and community investments. He explained those responses would earn extra credit points in scoring, intended to incentivize disclosure: "Our hope is that while the extra credit won't steer us away from a qualified bank to an unqualified financial institution, rather it might help us choose between more or less equivalent offerings," he said.

Speakers from community organizations, unions and residents — including representatives from ACE, the California Reinvestment Coalition, Greenlining Institute, SEIU and neighborhood residents — gave extensive public comment. Testimony detailed personal foreclosure experiences and criticized large banks’ responsiveness, with repeated references to Wells Fargo’s foreclosure practices in San Francisco neighborhoods. Several speakers explicitly urged creation of a municipal bank as an alternative, while others called for the questionnaire’s responses to be required rather than optional.

Supervisor Avalos thanked the Treasurer and the community speakers and urged the Treasurer to consider making responses mandatory, saying extra credit alone risks producing only "good faith" answers rather than required disclosures. Supervisor Kim noted state-law limits on creating a municipal bank but supported stronger RFP requirements where lawful.

The committee filed Item 3 (the broader banking-system hearing) and forwarded Item 4 (the RFP-related resolution) with recommendation.

The Treasurer indicated the RFP would be released in the coming weeks with the goal of selection and implementation before the end of 2012, stressing that implementation would be complicated and require careful work across accounts.