Moving Municipal Business Out of Wells Fargo

The business that state and local governments do with banks like Wells Fargo fall
into three general categories:

Cash Management: This includes things like depository accounts, lockbox
services, and debit cards.
Debt Management: This includes things like bond underwriting, credit
enhancements (e.g., letters of credit, liquidity facilities, etc.), interest rate
swaps, bond trustees, lines of credit, direct loans, and bond advising.
Investment Management: This includes managing a portion of city or
state’s pension funds and other investments.

With many types of debt management services, the ask is to refuse to do future
business with the bank and to remove it from any list of approved contractors or
vendors. That means that we aren’t necessarily asking for them to move existing
business, because it often cannot be moved, but we are asking them not to do
business with Wells Fargo again in the future and not to renew any contracts when
they expire. This can make debt management services the easiest to
The next easiest is investment management. This entails moving existing
business but there are many options for investment management. It’s just not that
hard to move this.
Cash management can be the hardest to move. This is because many smaller
banks don’t want city and state business for various reasons having to do with
reserve requirements. As a result, often the only options for depository services are
the big banks. This means that in many cases moving money out of Wells Fargo will
mean moving into another big bank that is equally bad or worse in many respects,
like JPMorgan Chase, Bank of America, or US Bank. In places where those other
banks don’t have a presence, there might not be any options other than Wells
Fargo. Furthermore, because of the sheer number of transactions that depository
accounts are responsible for, moving these accounts is far more disruptive to
financial staff and therefore more difficult to win. Demands to move depository
accounts probably need to be tempered with, “to the extent possible” or “at the
earliest practicable opportunity.”