Chicago latest to sanction Wells Fargo for defrauding customers
By Karen Pierog and Dave McKinney
CHICAGO (Reuters) - The Chicago City Council on Wednesday approved a one-year suspension for Wells Fargo & Co from city business because of its scandal over phony accounts, joining the states of Illinois and California in punishing the bank.
The ban includes bond underwriting, brokerage, trustee and other services the bank has provided to the city. 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 approval 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 has 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.
Illinois penalized the bank earlier this week while California announced a 12-month sanction against Wells Fargo, that state's oldest financial institution, on Sept. 28. California replaced Wells Fargo as a lead underwriter on two bond sales in the wake of its decision.
On Wednesday, Wells Fargo said it would continue to serve Chicago customers and support non-profit community agencies, 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. Continued...