SAN ANTONIO – This time, the bank’s credit was the problem -- its reputational credit, at least.
The San Antonio City Council delayed a routine vote on Thursday after an even split over whether to use Wells Fargo to help issue city bonds.
City staff had included the bank in a proposed pool of 20 underwriters that could assist the city over the next three to five years.
However, District 9 Councilman John Courage led half the council in trying to exclude the bank because of its recent history.
“It’s just apparent to me this bank does not care about its customers. It does not care about any of the cities it does business with. It cares about making money any way it can,” Courage said.
Wells Fargo has been sanctioned repeatedly by U.S. regulators for violations of consumer protection laws going back to 2016 when employees were found to have opened millions of accounts illegally in order to meet unrealistic sales goals. Since then, executives have repeatedly said Wells is cleaning up its act, only for the bank to be found in violation of other parts of consumer protection law, including in its auto and mortgage lending businesses.
In December, the banking giant agreed to pay $3.7 billion to settle charges that it harmed customers by charging illegal fees and interest on auto loans and mortgages, as well as incorrectly applying overdraft fees against savings and checking accounts.
Last month, it agreed to pay $1 billion to settle a lawsuit filed by its shareholders who alleged the bank made misleading statements about its compliance with federal regulators after the fake account-opening scandal came to light in 2016.
Some council members, like District 8 Councilman Manny Pelaez, argued it was unfair to single out Wells Fargo.
“I challenge anybody in this room to find me a company that can manage $500 million or more that hasn’t been fined,” Pelaez said.
“If we’re going to do this on one bank, we got to do it for all of them, right? Because what’s good for the goose is good for the gander, too.”
With District 4 Councilwoman Adriana Rocha Garcia away at a seminar, the remaining council members split 5-5 over whether to remove Wells Fargo from the proposed pool of underwriters.
Council members Courage, Mario Bravo (D1), Jalen McKee-Rodriguez (D2), Teri Castillo (D5), and Rosie Castro (D7) voted in favor of excluding the bank.
Council members Pelaez, Phyllis Viagran (D3), Melissa Cabello Havrda (D6), Marc Whyte (D10), and Mayor Ron Nirenberg voted to keep it on the list.
Though the motion failed, a separate vote to delay the item until next week passed 6-4.
“I think it’s important that we have this week to, you know, look at the history of each of the banks. Decide, you know, what is the standard we’re going to set? Is it one, a bank that we’re going to remove? Is it multiple?” said McKee-Rodriguez, who proposed the delay.
The vote to delay split roughly along the same lines, though Cabello Havrda joined the anti-Wells Fargo faction in supporting a delay. A spokesman for the councilwoman said her decision was because she agreed more time was needed for research.
City staff said the firms’ histories had been part of the evaluation process. Chief Financial Officer Ben Gorzell noted there is likely to be “some kind of regulatory action on virtually all” of the banks and firms working in a “very complex financial environment.”
“We tried to look at that, and...I’ll say, ‘is it in the normal course and scope of work that you typically see? Or are there things that are a little bit different?’” Gorzell said.
The proposed pool of underwriters was separated into three categories based on the size of the firms: those with less than $20 million in capital, those with more than $500 million, and those somewhere in between.
Out of the seven firms at the deep end of that pool, Wells Fargo was the last to make the cut in the city’s scoring process. It has thousands of employees in the San Antonio area, though, and received points for “local preference.”
Staff and council members said a similar conversation about Wells Fargo happened several years ago, but the issue went forward anyway. Gorzell did not know how often the city had used the bank, but he confirmed it had been involved in some transactions.
Staff said taking Wells Fargo out of the underwriter pool would not have a significant impact on the city’s ability to issue debt. However, they said the council needs to approve the final list soon so they can prepare to issue the next round of debt for the 2022 bond program.
Representatives from Wells Fargo that attended the meeting declined to speak with KSAT afterward, but John Young, a director in the bank’s public finance department, told council members that the headlines of Wells Fargo paying fines “are all related to these regulatory issues that came up many years ago.”
The Associated Press contributed to this story.