‘Consistent history of wrongdoing’: SA City Council spurns Wells Fargo over scandals, penalties

The bank was dropped from a proposed pool of underwriters in a 7-4 vote

FILE - A Wells Fargo bank sign hangs outside a window on Jan. 13, 2021. (AP Photo/Mark Lennihan, File) (Mark Lennihan, Copyright 2021 The Associated Press. All rights reserved)

SAN ANTONIO – The San Antonio City Council declined Wells Fargo’s card Thursday as it voted 7-4 to drop the multinational banking giant from a proposed pool of underwriters.

Led by District 9 Councilman John Courage, council members cited Wells Fargo’s recent history of banking violations as a reason to leave it off a list of banks and financial firms pre-approved to help the city issue debt. After removing Wells Fargo, the council unanimously passed the list of the remaining 19 financial institutions.

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Wells Fargo’s supporters had argued that other banks have similar problems, but Courage said it was clear Wells Fargo, which has been slapped with billions of dollars worth of penalties in recent years, “stood out above the rest as a habitual violator for harming their customers.”

“Don’t get me wrong,” Courage said. “I am not disparaging any local employee or the leadership here. I have a problem with the corporate integrity, or lack thereof, and their consistent history of wrongdoing and their lust of corporate profit by any means necessary.”

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.

Council members Mario Bravo (D1), Jalen McKee-Rodriguez (D2), Phyllis Viagran (D3), Adriana Rocha Garcia (D4), Teri Castillo (D5), and Rosie Castro (D7) joined Courage in voting to exclude the bank.

Council members Melissa Cabello Havrda (D6), Manny Pelaez (D8), Marc Whyte (D10), and Mayor Ron Nirenberg voted to keep it on the list.

The city council had been split 5-5 when it argued the issue last week when Rocha Garcia was absent. Her return and Viagran’s decision to switch sides gave the banks’ opponents the votes they needed to remove them from the list.

“My small businesses are struggling, and the banks, the institutions are not providing financing. So if we can lead by example here at the city level, I think that’s key,” the South Side councilwoman said of her reasoning for changing her vote from last week.

City staff said the bank’s regulatory issues were taken into account during the scoring process for its recommendations.

Though Nirenberg said he supported a larger conversation about how the city could apply corporate responsibility standards to the city’s procurement practices, “the issue I’m having is that we are inconsistently applying the standards to our procurement process from the dais, and that is...an issue that I think can cause problems further down the road.”

Wells Fargo Region Bank Director Joe Atkinson said the bank has 4,700 local employees and has given millions of dollars to nonprofits. He tried unsuccessfully to convince council members that the bank’s problems were behind it.

“The company that you’re talking about is not the same company it is today,” Region Bank Director Joe Atkinson told the council.

City of San Antonio Chief Financial Officer Ben Gorzell said the remaining pool of underwriters would still meet the city’s needs in helping it issue bonds.

Gorzell said he believed Wells Fargo is also part of a pool of broker-dealers the city works with to purchase investment securities. The city is in the process of updating that pool as well.

The Associated Press contributed to this story.

About the Author

Garrett Brnger is a reporter with KSAT 12.

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