On Monday, City Council’s Committee on Finance voted unanimously to approve a bill that would drop Wells Fargo as the bank in charge of the city’s $2 billion payroll, replacing it with Citizens Bank.
The city began evaluating its 48-year relationship with Wells Fargo Bank after the bank’s $185 million fake accounts scandal that came to light last year. It was found that Wells Fargo employees fraudulently opened millions of unauthorized customer accounts beginning as far back as 2002. More than 5,000 employees were fired, and the bank’s CEO resigned.
Last fall, city Councilwoman Cindy Bass sponsored a resolution to remove Wells Fargo as the government’s payroll handler, and last month, she introduced the bill in favor of Citizens Bank last month.
“As many of you know, I have been pushing for the city to divest from Wells Fargo for quite some time. Time and time again their actions have revealed them to be the antithesis of corporate social responsibility,” Councilwoman Bass said in a statement released on Monday. “I want to thank my colleagues on the committee for doing the right thing and sending a message that we will not do business with companies that engage in unethical business practices.”
The city’s Office of the City Treasurer put out a request for proposal for a new bank last fall and got a response from seven including TD Bank, Bank of America, Santander and PNC. But city treasurer Rasheia Johnson maintains that the RFP was not in response to Wells Fargo’s recent controversy. Instead, Citizens, with its low pricing, will allow the city to save money, Johnson has said. And its understanding of community needs also played a part in the city’s decision. The bill mentions Citizens community development plan that would create initiatives for Philadelphia’s low to moderate income families, individuals and minority small businesses.
Cities like Seattle have already severed ties with Wells Fargo over its role as a lender to the Dakota Access Pipeline. States like Illinois and California have ended contracts with the financial institution over the toxic scandal.
Philadelphia’s legislation will remove city payroll funds from the bank but won’t drop Wells Fargo from Philly’s list of depository banks. In a statement, Wells Fargo said it is “disappointed” that Philadelphia, “a valued customer,” has decided to move payroll processing to another bank.
The bill will be up for a final vote by city council members next week, and if approved, Wells Fargo will provide a six-month period for the city to transition to Citizens.
Follow @fabiolacineas on Twitter.