City of Seattle cancels business with Wells Fargo after ‘betrayal of public trust’
SEATTLE — The city of Seattle sent a letter to Wells Fargo on Thursday stating that it would not be using the bank as a lender for an upcoming $100 million bond financing.
The letter — signed by mayor Ed Murray and councilmembers Bruce Harrell and Tim Burgess — reprimanded Wells Fargo for its “reprehensible” treatment of customers.
In a statement Wells Fargo said it was “disappointed” in the city’s action. It also said the city’s business with the bank was managed separately from the retail operation involved in the scandal.
“We are taking important steps to ensure that the sales culture in our retail banking business is 100-percent aligned with our customers’ interests,” the statement said.
The move by Seattle follows similar actions by other governments to suspend business with the company.
Here is the full text of the letter obtained by Q13 News:
“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.”
Here is Wells Fargo’s full statement:
“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.
Wells Fargo will continue to serve our local customers and be the same committed community partner in Washington, where in 2015 we donated more than $3.8 million to nonprofits and schools. In addition, we earmarked $248.5 million in community development loans and investments in support of affordable housing, community service, and economic development.”