NEWS BRIEF The Chicago City Council announced Wednesday that it was suspending business with Wells Fargo for a year—the latest action taken against the bank for its scandal involving fake bank accounts.
The ban will suspend a number of services the bank has previously provided to the city, including underwriting, brokerage, and trustee services, which have earned the bank more than $19 million since 2005.
“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,” Alderman Edward Burke, chair of the city’s finance committee, said.
Wells Fargo responded in a statement expressing its disappointment with the city’s decision, which it said was made “at a time when the city needs access to dependable financial partners.”
Chicago’s decision may soon be seen across Illinois. Bruce Rauner, the Illinois governor, announced Sunday the state would not be using the bank for debt deals “until further notice.” Michael Frerichs, the state treasurer, announced Monday the suspension of state investment activity with the bank totaling $30 billion.
The state of California issued a similar suspension against the bank last week in an unprecedented move that is expected to cost Wells Fargo millions of dollars.
Both decisions follow mounting national pressure on Wells Fargo, which was discovered last month to have created millions of phony bank and credit-card accounts over the past five years in an effort to hit sales targets. Federal regulators slapped the bank with a $185 million fine—the largest to be issued since the Consumer Finance Protection Bureau’s founding in 2011. Since then, the bank has fired 5,300 employees said to have been involved in the scandal, but that hasn’t placated lawmakers in Congress who have sharply questioned John Stumpf, the bank’s CEO.
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