NEW YORK, May 31 (Reuters) - New York City Mayor Bill de Blasio and Comptroller Scott Stringer said on Wednesday they will vote to suspend doing business with Wells Fargo after a key rating fell below a “satisfactory” level.
According to the joint statement from de Blasio and Stringer, who hold two of the three votes on the city’s banking commission, the decision to stop doing business with Wells Fargo follows a Federal Community Reinvestment Act (CRA) rating of “needs improvement.”
“The ban will be revisited only when the bank’s rating is raised,” the statement said.
San Francisco-based Wells Fargo was caught last year in a major scandal where staff created bogus customer accounts to boost performance measures. As a result, cities and states have banned the bank from its municipal banking operations, contributing to a slump in its underwriting business, Reuters reported earlier this month.
“Wells Fargo appreciates the continuing dialogue with New York City and deeply values our relationship with the city. 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,” Wells Fargo spokesman Gabriel Boehmer told Reuters in an email.
“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,” he said.
The New York City Banking Commission’s three members are due to meet later on Wednesday. The third vote on the commission belongs to Jacques Jiha, the city’s Commissioner of Finance.
All three will vote to suspend business with Wells Fargo, a mayoral spokesperson told Reuters.
Wells Fargo holds $227 million of collected city taxes and fees and acts as a trustee to the New York City Retiree Health Benefits Trust, currently holding its roughly $2.6 billion in assets.
The ban will suspend the bank’s role as a senior book-running manager for the city’s General Obligation as well as Transactional Finance Authority bond sales. The ban will remain in place for one year.
“The only allowable exemption will be for affordable housing financing, which has a direct benefit to New York City residents,” the joint statement said.
After the expected vote, New York City agencies will be prevented from entering into new banking services or related contracts with Wells Fargo, as well as bar them from renewing or extending existing contracts when they are due to expire.
Reporting by Daniel Bases, editing by G Crosse