Wells Fargo’s Hometown Penalizes Bank Amid Fake-Accounts Scandalby
San Francisco bars lender from some city business for 2 years
City says customers must be made whole before sanction ends
Wells Fargo & Co., the bank working to contain a scandal over bogus accounts, was suspended from doing some business with its hometown of San Francisco.
The city’s Board of Supervisors on Tuesday suspended the firm for two years from providing services as a broker dealer, in commercial banking and in commercial paper. The measure, sponsored by Supervisor John Avalos, also removed Wells Fargo from securities investments and counterparty/repurchasing agreements. San Francisco had barred the lender in September from a banking program for low-income residents.
Authorities including the U.S. Consumer Financial Protection Bureau have fined the company $185 million for potentially opening more than 2 million deposit and credit-card accounts without authorization. On Tuesday, federal regulators banned Wells Fargo from buying non-bank companies or setting up international units because of deficiencies in its restructuring plan in the event of failure.
San Francisco officials said that the bank should identify the improper sales practices conducted in the city, the identities of all residents affected and the plan to make them whole before the firm can resume business with the city. They may pursue more sanctions if the information isn’t received.
Ruben Pulido, a Wells Fargo spokesman, said the lender is ready to continue its work with the city.
“With a workforce of 8,000 in San Francisco, Wells Fargo is the city’s largest private employer and a leading philanthropist,” Pulido said in an e-mail. “Over the past three years, Wells Fargo has donated approximately $30 million to San Francisco charitable organizations.”