San Antonio council split on whether to do business with Wells Fargo

Wells Fargo Bank’s recent $3.7 billion settlement over consumer banking violations involving auto loans, mortgages and personal bank accounts gave a handful of City Council members pause Thursday when asked to include the financial giant as one of the city’s underwriters in bond sales.

Council narrowly decided to wait another week so they could, as District 9 Councilman John Courage put it, “do their homework” on the record of all 20 financial firms that city staff recommended be part of San Antonio’s financial underwriting pool for the next three to six years.

Courage sided with the council’s progressives — Teri Castillo, Jalen McKee-Rodriguez, Mario Bravo and Rosie Castro — in voting to delay approval until the June 15 meeting, which will be Castro’s last.

District 6 Councilwoman Melissa Cabello Havrda, who typically sides with the council’s more business-friendly members, also supported the delay — a move that saved the full list of recommended firms from failing to be selected had there been a tie vote due to the absence of District 4 Councilwoman Adriana Rocha Garcia.

Cabello Havrda, whose district is home to the bank’s San Antonio headquarters, voted against Courage’s attempt to nix Wells Fargo from the list, which failed on a 5-5 vote.

Courage and the progressives maintained that excluding Wells Fargo would demonstrate the city’s values.

“I think it behooves the council to make a show of the fact that we’re not gonna be willing to play this game as usual, that we’re not gonna reward bad behavior, and that we are going to look at integrity when we make our decisions,” Castro said.

In December, Wells Fargo agreed to pay a record $1.7 billion in penalties and $2 billion in damages to settle claims that it took advantage of customers over the last decade, some of whom had their cars repossessed by the bank, lost their homes or were charged improper overdraft fees. That settlement established “Wells Fargo as one of America’s worst-run big banks,” The New York Times wrote.

District 8 Councilman Many Peláez pointed out that many of the recommended firms had checkered histories, highlighting J.P. Morgan Securities, Morgan Stanley and Co., and Jefferies, among others.

“If we’re gonna vote to exclude Wells Fargo from this long list of other companies that have been fined, the intellectually honest approach would be to scrap every single one of those firms that I read, which would leave Troy and Gorzell with no firms to manage our money,” Peláez said, referring Chief Financial Officer Ben Gorzell and Deputy CFO Troy Elliott. “Again, I challenge anybody in this room to find me a company that can manage $500 million or more that hasn’t been fined.”

Wells Fargo has been part of the city’s underwriting pool since 2017, according to city spokesperson Laura Mayes. The authorization of that pool expired in 2022.

In 2016, multiple cities and states temporarily suspended their business relationship with the bank over revelations that it opened millions of unauthorized customer accounts, resulting in a $3 billion fine to the federal government.

The City Council had a similar debate in 2017 about whether to include Wells Fargo, Gorzell said, but ultimately decided to move forward with the institution.

“We do due diligence across all the firms, and we look at that and then we incorporate that into our scoring,” he told reporters of the work an internal city evaluation committee did before presenting the council with their list of recommendations. “Recognizing that these banks and firms work in a very complex financial environment, you’re typically going to see some kind of regulatory action on virtually all of them.”

The city has not had any issues with Wells Fargo regarding its ability to perform municipal underwriting services, Gorzell told the council.

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Excluding Wells Fargo would not significantly impact the city’s ability to issue bonds, he later said.

“We want opportunities for small firms, medium-sized firms and large firms to be able to play a role in the issuance of city bonds,” Gorzell said. “We’ll still have that at the end of the day whether we’ve got 19 firms or 20 firms.”

Castillo, who was one of the most vocal council members about her concerns about the bank, questioned why some of her colleagues were willing to “give grace” to the bank but were opposed to expanding the police department’s cite-and-release policy, which allows officers to issue citations rather than make arrests for select low-level, non-violent crimes. Castillo, McKee-Rodriguez and Castro were the only council members who backed Proposition A in the May 6 election, which sought to make citations largely mandatory rather than optional.

“I think it’s worth noting that we’re either gonna give grace to criminals or we’re not, but it seems to be an inconsistency that if you’re a multi-billion-dollar criminal, you get the grace, the contra,cts and you continue to keep profiting,” Castillo said. “When it comes to working families of color who commit crime, it’s lock them up. They should no longer have access to housing, health care or employment.”

District 10 Councilman Marc Whyte jumped on that comment, using it to repeat misinformation from the campaign season about how the existing SAPD policy works.

“Wells Fargo and others have been fined hundreds of thousands if not more than that — millions — of dollars when they do wrong, and I think one of the issues on the cite-and-release side is really there are no penalties for some of the crimes that are happening here throughout the city and that continue to happen,” Whyte said. “But, we’re not here to talk about cite-and-release today, I don’t think.”

That prompted Castillo to correct him, saying, “A citation is enforcement and a repercussion.”

After the meeting, she took to Twitter to post a photo of herself outside the Wells Fargo location at One Alamo Center just blocks from City Hall.

“See you next week,” she captioned it.

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