County reinstates suspension of Wells Fargo
SAN JOSE – The Santa Clara County Board of Supervisors voted unanimously earlier this year to reinstate a suspension of certain business dealings with Wells Fargo & Company, sending a message that Santa Clara County will only do business with Wells Fargo when they have changed their business practices. The specific business dealings are: investments by the Controller-Treasurer's Department in all Wells Fargo securities; the use of Wells Fargo as a broker-dealer for purchasing of investments; and the use of Wells Fargo as a managing underwriter on County debt issuances, all for a period of four years.
“Wells Fargo broke the trust of the people of Santa Clara County,” said County Supervisor Joe Simitian, who proposed the initial suspension in 2016 and initiated the recent suspension reinstatement. “Back in 2016, we had to stand up and do something. In the seven years since, Wells Fargo has not earned back that trust. Just recently, the bank was ordered to pay $3.7 billion for violating consumer protection laws, so we’ve got to step up again.”
Wells Fargo has been sanctioned repeatedly by U.S. regulators for violations of consumer protection laws going back to 2016. Since then, Wells Fargo executives have said they have reformed the bank’s business practices; nevertheless, the bank has now been found in violation of other parts of the consumer protection law. Most recently, in December 2022, Wells Fargo agreed to pay $3.7 billion to settle charges it harmed customers by virtue of illegal fees and interest it charged on auto loans and mortgages, as well as incorrectly applying overdraft fees against savings and checking accounts.
“Our County was a primary investment and debt partner with Wells Fargo in 2016,” observed Simitian. “We pulled our business to help spur change at Wells Fargo. Since then we haven’t seen the kind of reform from Wells Fargo that our residents deserve. These most recent sanctions demonstrate that Wells Fargo still hasn’t learned from past mistakes. If continuing to pull our business is what it takes to change behavior, then so be it.”
In 2020 Santa Clara County also ceased contracting for operational banking services with Wells Fargo (deposits, lockers and safe drop boxes, clearing of checks, etc.). Operational services were part of a five-year contract signed with Wells Fargo in 2015, before the revelations about Wells Fargo’s business practices were known. When that contract expired, the Board directed a new competitive procurement process, eventually approving a five-year contract for operational banking services with JPMorgan Chase on September 27, 2022.
“Even though Santa Clara County is only a portion of Wells Fargo’s business, if the bank doesn’t improve its practices, it’s important that the County doesn’t reward them by continuing with business as usual. It’s a shame,” said Simitian. “Wells Fargo was once an iconic brand.”