In the News
Daily News: Wells Fargo Scandal May Force New York City to Find New Bank
By Erin Durkin
City rules may require New York to yank its deposits from Wells Fargo, one of 20 banks approved to hold the city’s cash.
A commission is set to meet next week to decide which banks are approved for city deposits for the next year — and advocates point to the city’s own rules to argue officials are legally required to bump the embattled bank from the list.
Wells Fargo — embroiled in a scandal over the creation of up to 2 million fake accounts — was knocked down to a “needs improvement” rating by federal regulators in March under the Community Reinvestment Act, citing an extensive pattern of discriminatory and illegal lending practices.
New York City rules say that in order to be designated to get government deposits, a bank must have at least a “satisfactory” rating.
“The city’s own rules require that they sever ties,” said Andy Morrison, campaigns director for the New Economy Project.
“The rule exists for a reason,” he said. “It’s the city’s money and shouldn’t be in banks that are failing to service communities.”
The city has hundreds of millions of dollars deposited with Wells Fargo, sources said. An exact figure was not available.
The Banking Commission is set to meet May 31 to approve a new list of banks, a session that was originally scheduled for Tuesday and then postponed.
Mayor de Blasio and City Controller Scott Stringer sit on the commission, along with Finance Commissioner Jacques Jiha.
“What happened at Wells Fargo is unacceptable — and there needs to be real accountability,” said Stringer spokesman Tyrone Stevens.
“Our office has demanded the bank take a series of steps to begin restoring investor, customer, and public confidence. We are currently reviewing the city’s business relationship with Wells Fargo and working with the de Blasio administration to determine the best course of action going forward.”
A de Blasio spokeswoman did not answer questions about Wells Fargo other than to say the issue would be discussed at the time of the meeting next week.
“Wells Fargo has a proud history and a strong track record in New York City of lending to, investing in, and providing service to low- and moderate-income …communities,” said spokesman Kevin Friedlander, saying the bank has been involved in $10 billion of affordable housing financing in the city over the last five years.
“Wells Fargo is a leader in financing affordable housing nationally. In New York City, we are the largest affordable housing lender and tax-credit purchaser.”