San Francisco won’t call for a clean break from doing business with Wells Fargo following the company’s recently exposed banking scandal, but city officials on Wednesday vowed to implement sanctions and demand proof of wrongs righted.
The City Controller has outlined a number of steps The City will take to sanction the San Francisco-based bank in a memo issued Wednesday. The action comes after Wells Fargo was fined in September by the Consumer Financial Protection Bureau $185 million related to employees opening more than 2 million banking accounts without customers’ knowledge.
The memo also comes as the Board of Supervisors will vote Tuesday on a resolution, which was introduced by Supervisor John Avalos, incorporating the controller’s recommendations after it was amended during Wednesday by the Board of Supervisors Budget and Finance Committee.
The initial resolution called for “Ending Business with Wells Fargo,” but that was amended Wednesday to instead call for “Sanctioning Wells Fargo.”
The measures, City Controller Ben Rosenfield said, are in line what has been done in other jurisdictions, such as Los Angeles, Santa Clara and Santa Cruz counties.
That includes a two-year suspension of Wells Fargo’s “provision of broker/dealer, commercial banking, and commercial paper dealer services to the city;” a two-year removal of Wells Fargo for the provision of securities investments and counterparty/repurchase agreements and to incorporate social responsibility provisions in future banking contract solicitations.
“Taking the combination of the steps outlined above would allow The City to make clear its disapproval of the Wells Fargo’s unethical practices, without creating significant disruptions to city financial operations or capital planning,” Rosenfield said in the Dec. 7 memo.
Avalos wanted to have sharper penalties for Wells Fargo’s business, such as suspending Wells Fargo from bidding on bond underwriting, but Rosenfield argued Wednesday that was too costly for The City, and it was removed from the resolution.
Rosenfield said that, for example, the San Francisco Public Utilities Commission recently went out for a $200 million bond, which Wells Fargo successfully bid on with the lowest rate. The second best bid would have cost The City $3.4 million more.
Another provision in the resolution — to revoke the name “Wells Fargo Plaza” from the main hospital plaza at the Zuckerberg San Francisco General Hospital and Trauma Center — was also removed after opposition from the Health Department director, who said naming rights were important to fundraising efforts.
“We admonish Wells Fargo’s banking practices that have caused harm,” Garcia wrote in a Nov. 22 memo. “At the same time, we recognize the philanthropy and banking practices are distinct from each other. The Wells Fargo Foundation has been a long-standing contributor to the hospital.”
City Treasurer José Cisneros previously announced he ended his partnership with Wells Fargo for a program to encourage residents to open bank accounts.
“Not only did Wells Fargo’s action impact millions of bank customers it also sends a signal to those who are still unbanked both in our city and across the country that stashing their money in a piggy bank or under a mattress instead of in a financial institution may be the safest option that they have,” said Amanda Fried, a spokesperson for Cisneros.
Wells Fargo remains under investigation, including by the Justice Department.
Jim Foley, president of Wells Fargo’s Pacific North region, predicted more bad headlines for the company as the investigations unfolded.
“We will re-earn the trust of the public as well as the city of San Francisco, where we first started our institution in 1852,” he said.
“We had a product sales goals process that sometimes resulted in behaviors that did not serve our customers best interests,” Foley said during Wednesday’s hearing. “We are committed to learning the necessary lessons and take decisive actions so that our customers will never have to be susceptible to these kinds of behaviors today.”
Both Fried and Supervisor Katy Tang called on Wells Fargo during the hearing to release the names of Wells Fargo customers impacted by the recent scandal, as does the resolution.
“We also still don’t have the basic information and the treasurer has requested it directly on numerous occasions from the bank,” Fried said. “We don’t know how many San Franciscans have been affected. We don’t know if they have been notified. We don’t know if they have received any restitution.”