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NYC Pulls Back From Wells Fargo

New York City is banning new accounts with Wells Fargo pending a repair of its CRA rating, Mayor Bill de Blasio announced on May 31.
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New York City has pulled back on its business dealings with Wells Fargo. Mayor Bill de Blasio and city Comptroller Scott M. Stringer, both banking commission members, have voted to prohibit the city from starting new deposit contracts with the institution and suspend other Wells Fargo roles in the wake of a lowered federal rating under the Community Reinvestment Act (CRA).

This means no new accounts will be added to the $227 million in city funds that reside in Wells Fargo, the mayor’s office said in a statement on May 31.

The New York City Banking Commission approves and oversees the banks that hold official city deposits. Wells Fargo recently received a “needs improvement” rating under the Federal Community Reinvestment Act (CRA), de Blasio’s office said, adding, “The ban will be revisited only when the bank’s rating is raised.”

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“The rules are very clear: If you fall below ‘satisfactory,’ we will no longer do banking business with you,” de Blasio said in the statement. “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.”

The lowered rating was base on a period of time before the recent scandal over fraudulent accounts, also pre-dating the push to stop the bank from helping finance the Dakota Access Pipeline (DAPL). A spokesperson said the bank is working to get its rating back up.

“Wells Fargo appreciates the continuing dialogue with New York City and deeply values our relationship with the City,” said Wells Fargo spokesperson Gabriel Boehmer in an e-mailed statement. “More than four years have passed since the end of our last CRA evaluation period, and we are seeking an expedited review of the 2012–2015 exam. We hope to restore a national CRA rating that reflects our strong track record of lending to, investing in, and providing service to low-and-moderate-income communities.”

While the mayor did not indicate that the DAPL conflict had anything to do with the decision, his office had sent letters to 17 banks, including Wells Fargo, in February asking them to consider not funding the project. Several cities have pulled funds out of the bank, including Seattle, which severed ties earlier this year.

Stringer implied that the hold had more to do with the bank’s creation of phony accounts last year in order to meet sky-high quotas that did the relationship in.

“What happened at Wells Fargo was a fraud—and there should be consequences,” Stringer said in the city’s statement. “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.”