New York City Mayor Bill de Blasio and Comptroller Scott M. Stringer jointly announced today that they will vote to prohibit New York City from entering into new contracts for deposits with Wells Fargo, as well as suspend the bank’s role as a senior book-running manager for NYC General Obligation and Transactional Finance Authority bond sales.
The New York City Banking Commission, which is scheduled to meet today, and of which the Mayor and the Comptroller are members, approves and oversees the banks that hold City deposits. Currently, Wells Fargo holds contracts with the City to provide banking services, including to operate “Lock Box” services that hold taxes and fees collected by the City. There is approximately $227 million of City dollars held in Wells Fargo accounts currently. Additionally, Wells Fargo acts as a trustee to the New York City Retiree Health Benefits Trust, which has current assets of approximately $2.6 billion. Recently, Wells Fargo received a Federal Community Reinvestment Act (CRA) rating of “needs improvement.” The ban will be revisited only when the bank’s rating is raised.
As such, today the Mayor and Comptroller will vote to prevent agencies from entering into new banking services or related contracts with Wells Fargo, as well as bar agencies from renewing or extending existing contracts on expiration. The City will also suspend the use of Wells Fargo as a senior book-running manager for municipal bonds – a position that allows the bank to take the lead on City bond sales – for one year. The only allowable exemption will be for affordable housing financing, which has a direct benefit to New York City residents.
Mayor de Blasio said: “The rules are very clear: if you fall below ‘satisfactory,’ we will no longer do banking business with you. 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. Until then, we will not be entering new contracts with the bank. Thank you to Comptroller Stringer for his partnership on this issue.”
Comptroller Stringer said: “What happened at Wells Fargo was a fraud – and there should be consequences. We need to send a message to this bank and the broader industry that ethics matter. Public trust is a must – and accountability is non-negotiable. That’s why we plan to take action. We have an opportunity to stand up and do the right thing today, and that’s a moment we plan on seizing. I would like to thank Mayor de Blasio and his team for their leadership on the issue.”