Seattle is dropping Wells Fargo as its lender for $100 million in City Light bond financing over the bank’s fraudulent opening of more than a million fake accounts.
Seattle officials said Friday they’re pulling out of a $100 million bond-financing deal with Wells Fargo to protest the company’s fraudulent opening of more than a million phony bank and credit-card accounts.
In a letter to Wells Fargo executives, Mayor Ed Murray, City Council President Bruce Harrell and Tim Burgess, the council’s finance-committee chair, said the company won’t be the lender on the deal for Seattle City Light.
The company won the deal recently through a competitive bidding process but the contract hasn’t yet been signed.
The decision to scrap the City Light deal is separate from and won’t necessarily affect Seattle’s regular business with the bank. Wells Fargo holds a much larger, more sweeping contract to provide routine banking services for the city.
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Dating to 2013, that contract is set to expire in 2018, said Benton Strong, spokesman for Murray.
“While this contractual relationship has met the city’s banking needs, we were extremely disappointed to hear of the alleged unethical and likely illegal conduct that Wells Fargo has acknowledged engaging in,” Friday’s letter says.
It goes on to say, “The people of Seattle expect far better from the city’s business partners. In light of this, and effective immediately, we have concluded that we cannot continue to work with Wells Fargo as lender on the $100 million bond financing for Seattle City Light that was on track to close this month.”
The letter says that in order for Seattle to consider “continuing a relationship” with the company, it must provide the city with information on how it intends “to rectify this situation, make reparations to those harmed and ensure something like this never happens again.”
Federal and California regulators have fined Wells Fargo $185 million, saying employees of the San Francisco-based company striving to meet tough sales targets opened up to 2 million fake accounts on behalf of unwitting customers.
The employees issued and activated debit cards and signed people up for online banking without their permission, according to regulators.
Earlier this week, 14 senators called on the U.S. Department of Justice to open a criminal investigation of Wells Fargo executives for allowing the fraud to go on for years.
The Chicago City Council this week approved a one-year suspension of business with Wells Fargo.