The City of New York is planning to scale back its banking relationship with Wells Fargo & Co. after its Community Reinvestment Act rating was downgraded to "needs to improve" from "outstanding," according to a joint announcement by the city's Mayor Bill de Blasio and Comptroller Scott Stringer.
The company has faced a number of ripple effects from a sales malpractice scandal since September 2016.
Mayor de Blasio and Comptroller Stringer, as members of the New York City Banking Commission, will vote to ban the city's agencies from signing new contracts for deposits, or renewing or expanding their existing contracts, with the company. They are also planning to suspend for one year Wells Fargo's role as senior book-running manager for New York City's general obligation and Transactional Finance Authority bond sales.
The mayor said in the statement: "The rules are very clear: if you fall below 'satisfactory,' we will no longer do banking business with you." He encouraged "Wells Fargo to quickly clean up its act and do right by the millions of customers who trust the bank with their savings."
"Until then, we will not be entering new contracts with the bank," he added.
New York City is the newest addition to several states and cities that have cut ties with Wells Fargo in the aftermath of the fake-account-opening scandal.
Wells Fargo holds about $227 million of New York City's deposits in its accounts, among other banking relationships between the company and the city.