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The Grid 

Wednesday, Feb 11 1998
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Checking Accounts
However badly you have mangled your personal finances -- however often you have used one maxed-out credit card to make the minimum payment on another -- you are probably one up on the city and county of San Francisco. At least, that is what we have concluded after attempting to figure out what's been going on between the city and the Bank of America.

Initially, we thought the assignment would be simple. Peter Byrne, a Weekly contributing writer, had put together an astonishing story. The piece laid out documentation strongly suggesting that the Bank of America had stolen hundreds of millions -- even billions -- of dollars from California governments, and that San Francisco finance officials knew or should have known about some of the thievery as it occurred (see "The Great Bank Thievery," Dec. 31).

During his research into a lawsuit the city, state, and other governments are pursuing against BofA, Byrne came upon an interesting fact. Many BofA contracts to handle city money apparently had never been put out to competitive bid.

This situation seemed strange to us; most governments not run by Ferdinand Marcos make a special effort to bid their public banking contracts. Governments accumulate, disburse, and invest huge amounts of cash. (The city of San Francisco, for example, runs an average balance of somewhere between $30 million and $50 million in its main depository accounts.) Normally, competition forces bankers eager to handle these large deposits to give the government attractive rates on banking services.

But everyone knows San Francisco is not a normal place.
Confirming that Bank of America had an unusual, noncompetitive lock on most city banking did, in fact, prove to be a simple assignment. City fiscal types agree: BofA has long been the city's main bank, and most of the contracts it holds have not been competitively bid.

But then we did something that apparently flummoxed the city bureaucracy. We asked simple, direct questions. What contracts did BofA have with the city? How much money had the bank made from those contracts in the last 18 months? Does the law require the city to put any of those contracts out for competitive bids?

Because the Grid is a reader-friendly column, we will not trace the two weeks of scared-rabbit runaround and Clinton-esque evasion those simple questions inspired at City Hall. Instead, we'll cut to the chase: No one knew how many contracts BofA had. No one knew how much money BofA made. No one could say which contracts needed to be bid.

We absolutely kid you not.
Susan Leal, a former supervisor who took over as city treasurer just a few weeks ago, is attempting to untangle the BofA contracting mess as we write this column. Leal was refreshingly frank in discussing it.

She says that the city's unbid banking relationship with BofA apparently began in the 1930s. (That's right; the bulk of the city's banking business has been simply handed to BofA for 60 years.) She says there is a "contract" with BofA, but it doesn't describe consideration. The charges the city pays for different types of banking services are, Leal says, handled through addenda to that contract -- many, many individual fee schedules for services provided for many, many bank accounts.

Leal acknowledges that the employees in her new office were unable to quickly give her documentation completely describing the city's contractual relationship with BofA. She also acknowledges that it is passing strange for a city treasurer's office to be unable to instantly produce the contracts under which any firm does business with the city.

Leal says that her staff is gathering the scattered paperwork for all city banking contracts (the city does relatively minor business with some other banks) and compiling other base-line data on the operation of the Treasurer's Office. Only when that's done, she says, can she explain BofA's contracts with the city, and what consideration has been paid under them. "Until I get the universe laid out in front of me, it's hard to give you a subset [of that universe]," is how she put it.

We're all in favor of public officials who want to be thorough, especially when they face what appears to be decades of fiscal insanity. So we applaud Leal's thoroughness, and wait attentively for her to answer our simple questions.

While we wait, though, two other questions keep forcing themselves into our brains. The questions involve the lawsuit that Peter Byrne wrote about. The lawsuit that alleges BofA stole hundreds of millions of dollars -- or more -- from governmental bond accounts, and improperly overcharged governments for banking services. The lawsuit that the city joined last May.

Our new questions are simple and direct:
1) Why is the city just now trying to document the extent of its oddly incestuous financial relationship with this allegedly untrustworthy -- and possibly criminal -- bank?

2) Are the last eight months of business-as-usual with the allegedly untrustworthy, possibly criminal Bank of America evidence of city incompetence, or city corruption? Or are they evidence of both?

We're sorry. That's three questions, isn't it? We'll work on our math skills while we wait for some answers.

About The Author

George Cothran

About The Author

John Mecklin

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  • Nevada City and the South Yuba River: A gold country getaway

    Nestled in the green pine-covered hills of the Northern Sierra Nevada is the Gold Rush town of Nevada City. Beautiful Victorian houses line the streets, keeping the old-time charm alive, and a vibrant downtown is home to world-class art, theater and music. The nearby South Yuba River State Park is known for its emerald swimming holes during the summer and radiant leaf colors during autumn. These days the gold panning is more for tourists than prospectors, but the gold miner spirit is still in the air.

    South Yuba River State Park and Swimming Holes:
    The park runs along and below 20 miles of the South Yuba River, offering hiking, mountain biking, gold panning and swimming. The Highway 49 bridge swimming hole is seven-miles northwest of Nevada City where Highway 49 crosses the South Yuba River. Parking is readily available and it is a short, steep hike to a stunning swimming hole beneath a footbridge. For the more intrepid, trails extend along the river with access to secluded swim spots. The Bridgeport swimming hole has calm waters and a sandy beach -- good for families and cookouts -- and is located 14 miles northwest of Nevada City. Be sure to write down directions before heading out, GPS may not be available. Most swimming holes on the South Yuba River are best from July to September, while winter and spring can bring dangerous rapids. Always know the current before jumping in!

    Downtown Nevada City
    The welcoming, walkable downtown of Nevada City is laid back, yet full of life. Start your day at the cozy South Pine Cafe (110 S Pine St.) with a lobster benedict or a spicy Jamaican tofu scramble. Then stroll the streets and stop into the shop Kitkitdizzi (423 Broad St.) for handcrafted goods unique to the region, vintage wears and local art “all with California gold rush swagger,” as stated by owners Carrie Hawthorne and Kira Westly. Surrounded by Gold Rush history, modern gold jewelry is made from locally found nuggets and is found at Utopian Stone Custom Jewelers (301 Broad St.). For a coffee shop with Victorian charm try The Curly Wolf (217 Broad St.), an espresso house and music venue with German pastries and light fare. A perfect way to cool down during the hot summer months can be found at Treats (110 York St.) , an artisan ice cream shop with flavors like pear ginger sorbet or vegan chai coconut. Nightlife is aplenty with music halls, alehouses or dive bars like the Mine Shaft Saloon (222 Broad St.).

    The Willo Steakhouse (16898 State Hwy 49, Nevada City)
    Along Highway 49, just west of Nevada City, is The Willo, a classic roadhouse and bar where you’re welcomed by the smell of steak and a dining room full of locals. In 1947 a Quonset hut (a semi-cylindrical building) was purchased from the US Army and transported to its current location, and opened as a bar, which became popular with lumberjacks and miners. The bar was passed down through the decades and a covered structure was added to enlarge the bar and create a dining area. The original Quonset beams are still visible in the bar and current owners Mike Byrne and Nancy Wilson keep the roadhouse tradition going with carefully aged New York steaks and house made ingredients. Pair your steak or fish with a local wine, such as the Rough and Ready Red, or bring your own for a small corkage fee. Check the website for specials, such as rib-eye on Fridays.

    Outside Inn (575 E Broad St.)
    A 16-room motel a short walk from downtown, each room features a unique décor, such as the Paddlers’ Suite or the Wildflower Room. A friendly staff and an office full of information about local trails, swimming and biking gets you started on your outdoor exploration. Amenities include an outdoor shower, a summer swimming pool and picnic tables and barbeques. Don’t miss the free vegetable cart just outside the motel in the mornings.

    Written and photographed by Beth LaBerge for the SF Weekly.

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