LOS ANGELES (CNS) - As a result of stricter rules passed in the aftermath of a fake accounts scandal, the Los Angeles City Council voted today to replace Wells Fargo as its main banking partner.
The city does the majority of its banking with Wells Fargo through roughly 800 different accounts, and the recommended change to Bank of America and JPMorgan Chase, outlined in a report by the Office of Finance, was approved on a 13-0 vote.
Los Angeles Mayor Eric Garcetti in July 2018 signed an amended Responsible Banking Ordinance that requires any bank that bids for the city's contracts to disclose its sales goals and other potentially predatory business practices. The City Council in December 2017 also approved new language for a request for proposals for banks that ranks ``social responsibility'' factors.
Both moves were in response to the Wells Fargo fake accounts scandal, in which 3.4 million accounts were fraudulently created by employees given aggressive sales goals.
``It's a long time coming and we are finally getting to this spot, and I think it's a good place to be,'' Councilman Bob Blumenfield said earlier this month at a Budget and Finance Committee meeting when discussing the banking changes.
The city is contracted with Wells Fargo through June, but the Office of Finance recommended extending the agreement through June 2020 so it would have more time to work out details with the new banking partners, and the City Council also voted to extend the contract.
Eight financial institutions responded last year to the city's new request for proposals, the Office of Finance said, but Wells Fargo was not one of them.
The council's vote authorizes the director of the Office of Finance to negotiate agreements with the banks. Union Bank was also approved to continue handing the city's Neighborhood Council Funding Program.