The Chicago City Council on Wednesday approved a one-year suspension for Wells Fargo & Co from city business in the wake of its scandal over phony accounts.
The ban includes bond underwriting, brokerage, trustee and other services the bank has provided to Chicago. Wells Fargo has earned $19.5 million in fees from Chicago since 2005.
Wells Fargo staff opened checking, savings and credit card accounts without customer say-so for years to satisfy managers’ demand for new business, according to a $190 million settlement with U.S. regulators and California prosecutors reached on Sept. 8. The bank said it fired 5,300 employees over the issue.
“I hope this action by the city of Chicago will echo around the nation and make it clear to other institutions this conduct is unacceptable,” said Alderman Edward Burke, who heads the council’s finance committee.
Wells Fargo said it was disappointed in Chicago’s action, but that it would continue to serve local customers and support nonprofit community agencies and educational institutions and foundations.
“Wells Fargo is disappointed that the Chicago City Council has chosen to suspend a relationship with one of the nation’s safest and strongest financial institutions at a time when the city needs access to dependable financial partners,” the bank said in a statement.
Last week, California State Treasurer John Chiang announced a sweeping suspension of the state’s business relationships with Wells Fargo for the next 12 months. Illinois Governor Bruce Rauner’s office, which included Wells Fargo in a pool of senior underwriters for bond sales, said on Sunday the state would not be using the bank for debt deals “until further notice.”
Illinois Treasurer Michael Frerichs on Monday suspended $30 billion in state investment activity with the bank. Those activities include investments in Wells Fargo debt and bank broker/dealer services.
(Reporting by Karen Pierog and Dave McKinney; Editing by Matthew Lewis)