NEW YORK–New York City has suspended Wells Fargo from its municipal debt issuance operations.
The move was made after the bank’s rating tied to doing business in low and moderate-income communities was lowered to having fallen below a "satisfactory" level. The city also cited the bank’s 2016 account-opening scandal, in which it was found to have created bogus customer accounts to boost performance measures.
The New York City Banking Commission voted 3-0 in favor of not giving any new bond underwriting mandates or renewing any existing contracts with Wells Fargo. The decision follows a Federal Community Reinvestment Act (CRA) rating of "needs improvement" for Wells Fargo. The commission is composed of Mayor Bill de Blasio, Comptroller Scott Stringer and Commissioner of Finance Jacques Jiha.
"What happened at Wells Fargo was fraud - and there must be consequences for wrongful behavior," said Stringer in a statement.
The bank, however, was given a conditional designation as a New York City bank, meaning it can still hold funds under current contract because it would be too disruptive to immediately disentangle the city from the bank.
"The ban will be revisited only when the bank's rating is raised," de Blasio and Stringer said in a joint statement prior to the vote.
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.