New York City Bars Wells Fargo From Banking Work After Scandals
New York Mayor Bill de Blasio says bank needs to improve track record of lending.
(Bloomberg) -- New York Mayor Bill de Blasio and Comptroller Scott Stringer blocked Wells Fargo & Co. from leading municipal bond sales or landing other banking business until it improves its track record of lending in poor communities.
Scott Stringer
The Democrats, who sit on the New York City Banking Commission, joined city Finance Commissioner Jacques Jiha, a de Blasio appointee, to ban the bank from conducting new work for the city. The commission, which met Wednesday, approves and oversees the banks that hold city contracts.
The action from the nation’s most-populous city marks the latest effort by state and local government officials to punish Wells Fargo, whose reputation was battered by revelations that employees created fake accounts to meet sales quotas. The New York officials said their ban wouldn’t be reconsidered until the bank elevates its rating under the federal Community Reinvestment Act.
“The rules are very clear: if you fall below ‘satisfactory,’ we will no longer do banking business with you,” de Blasio said in the statement. “I encourage Wells Fargo to quickly clean up its act and do right by the millions of customers who trust the bank with their savings.”
Mayor de Blasio
Wells Fargo spokesman Gabriel Boehmer said the bank is making an effort to address criticism by the U.S. Office of the Comptroller of the Currency, which issued a needs-to-improve rating in March, citing the bank’s practices of selling unauthorized accounts and overcharging minority homebuyers with subprime mortgages.
“We hope to restore a national CRA rating that reflects our strong track record of lending to, investing in, and providing service to low-and moderate-income communities,” Boehmer said in an email.
City Comptroller Stringer said the bank committed fraud and should be punished.
“We need to send a message to this bank and to the broader industry that ethics matter,” Stringer said in an email. “Accountability is non-negotiable.”
New York has about $227 million held in Wells Fargo accounts, and the bank acts as a trustee to the New York City Retiree Health Benefits Trust, which has assets of about $2.6 billion.
The city is also a major issuer of bonds. Its proposed fiscal 2018 budget calls for the city to fund $13.4 billion of new capital spending, drawing from the sale of general-obligation, Transitional Finance Authority and Water Finance Authority debt.
The city’s step will prevent agencies from entering into new contracts with Wells Fargo or renewing existing ones when they expire. It also suspends Wells Fargo from working as a senior book-running manager for municipal bonds for one year.
To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net, Henry Goldman in New York at hgoldman@bloomberg.net.
To contact the editors responsible for this story: Christopher Maloney at cmaloney16@bloomberg.net, William Selway, Stacie Sherman