SAN JOSE (KPIX 5) — The city of San Jose is looking into the possibility of creating its own community bank, which would mostly be used for business services like paying contractors.
“What we’re proposing is to explore different models,” said City Councilmember Sergio Jimenez.READ MORE: Intel to Build $20 Billion Fabrication Facility in Midwest to Ease Chip Shortage
Jimenez, along with collegues Magdalena Carrasco and Raul Peralez, are pushing for the city to explore the option.
“We don’t know all the ins and outs of it yet, but the value that I see is that the money generated by that bank would stay in the community,” Jimenez said.
San Jose’s current banking partner is Wells Fargo, which has a contract until 2021. In an open bidding process, Chase Bank won the right to replace Wells Fargo.
But to do business with Chase, the city would have to waive its wage theft ordinance, which prohibits the city from doing business with companies that have wage theft violations. Chase is currently settling 22 wage theft cases for $160 million.READ MORE: Attorney General's Office: Man Shot Dead by Police at SFO Armed With Replica Gun
“Until they close those cases, I think it’s really important for the city to not do business with them,” said Jean Florence Cohen of UA Local 393, a union representing construction workers who have been victims of wage theft by building contractors.
But setting up its own bank would be new territory for San Jose. And it would be risky, according to Councilmember Johnny Khamis, who comes from a career in financial and investment services.
“In good years, we’re going to have a great outcome and banks do great in good years. But in bad years, the taxpayers are on the hook. And I think that’s our greatest risk,” Khamis said.
Mayor Sam Liccardo called it an interesting idea.MORE NEWS: San Francisco 49ers Confirm DE Bosa Cleared to Play Against Packers
“Dealing with taxpayer dollars is serious business. It’s not amateur hour. We need to make sure we understand exactly what we’re doing,” Liccardo said.