In light Wells Fargo's banking scandal, the City of Seattle will no longer work with the bank as a lender on a $100 million bond financing for Seattle City Light.
>> Related: 5,300 Wells Fargo employees fired for creating unauthorized accounts
City of Seattle mayor Ed Murray, council president Bruce Harrell and finance and budget committee chair Tim Burgess signed the letter, saying they believed that Wells Fargo was socially responsible with its banking practices.
Wells Fargo has faced weeks of scrutiny since federal regulators announced that it created two million fake accounts, most likely to meet sales goals.
Here are the key development on the Wells Fargo scandal:
- Federal regulators said Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts -- without their customers knowing it -- since 2011.
- Money in customers' accounts was transferred to these new accounts without authorization.
- Phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.
- 5,300 employees at Wells Fargo were fired.
- The San Francisco-based bank will pay $100 million to the Consumer Financial Protection Bureau.
In the letter, the city leaders stated that the $100 million bond financing for Seattle City Light was on track to close this month.
>> Related: How do you know if you were a victim of a fake Wells Fargo account?
The leaders demand that in order for the bank to re-establish a relationship in the future, it must provide detailed information on how it intends to rectify the situation.
KIRO 7 News obtained the letter the leaders wrote. Read it below:
As you know, following a competitive process. Wells Fargo was awarded a contract in 2013 to provide banking services to the City of Seattle. While this contractual relationship has met the City's banking needs, we were extremely disappointed to hear of the alleged unethical and likely illegal conduct that Wells Fargo has acknowledged engaging in.
Wells Fargo's practice of opening accounts in customers' names without their knowledge or approval is reprehensible, particularly in that it appears this strategy was not only condoned by management, but encouraged. Such a betrayal of the public trust is completely unacceptable. Your organization's underhanded practices greatly harm not only the customers who have been shouldered with bogus fees and unfairly reduced credit scores through no fault of their own, but also your own reputation and relationship with your institutional customers, including the City of Seattle.
The people of Seattle expect far better from the City's business partners. In light of this, and effective immediately, we have concluded that we cannot continue to work with Wells Fargo as lender on the $100 million bond financing for Seattle City Light that was on track to close this month. The City and its taxpayers must trust the practices and integrity of the institutions that handle our public funds.
If we are to consider continuing a relationship in the future, it is essential that you provide us with detailed information about how you intend to rectify this situation, make reparations to those harmed, and ensure something like this never happens again.
One factor that made Wells Fargo competitive in earning the City's business was a commitment to socially responsible banking practices by providing service and outreach to all members of our community. Especially important was your work with the Bank On Financial Empowerment Network and support of Express Credit Union in providing financial education and services for low- and middle-income households and the unbanked.
While these efforts have been appreciated, the recent allegations have undermined our confidence in Wells Fargo as a trusted partner. Your good faith effort to transparently reform your business practices and make reparations to those harmed will be required to rebuild that trust.
Wells Fargo released the following statement to KIRO 7 after we broke the story of the city's letter:
Wells Fargo is disappointed that the City of Seattle has decided to cancel our investment in its municipal light and power revenue bonds facility, which would have used the bank's very strong balance sheet to help the city manage its capital.
We are proud of the support we have diligently and professionally provided the city as its operating bank since 1999 to support its government, communities, and residents. Our highly experienced and proven government banking, securities, and treasury management teams stand ready to continue delivering outstanding service to the City of Seattle.
We manage the city's business in our Government & Institutional Banking division, which is separate from our retail bank. We are taking important steps to ensure that the sales culture in our retail banking business is 100-percent aligned with our customers' interests, including ending product sales goals for everyone in the retail banking business to make certain nothing gets in the way of doing what's right for customers.
Cox Media Group
