Wells Fargo & Co

Stock Symbols
NYSE
:
WFC
company headquarters
USA
ISSUES

One of the largest banking and financial services companies in the world. Has been one of the main financial backers of private prisons and immigrant detention companies. In 2019 it announced it would stop providing loans to these companies.

Wells Fargo is one of the largest multinational banking and financial services corporations in the world, and the fourth largest bank in the US. Headquartered in San Francisco, CA, the bank holds $1.89 trillion in assets and in 2018 reported $101.06 billion in revenue.

Wells Fargo has been identified as one of the six major banks supporting private prisons and  immigrant detention. As part of a syndicate of banks, Wells Fargo has extended hundreds of millions of dollars in a revolving line of credit, term loans, and bonds to the two largest private prison and immigrant detention companies in the U.S.: CoreCivic and GEO Group. These companies rely on banks and financing organizations to bankroll their operations and expansion into more carceral and punishment industries.

Going beyond its role as a lender, Wells Fargo has also issued CoreCivic letters of credit, which serve as a guarantee for payments to a third party, allowing the company to conduct certain transactions without setting money aside as would normally be required. Wells Fargo is a co-syndication agent for GEO Group’s revolving credit line as well as a joint lead arranger and joint bookrunner for the loan. Additionally, the bank has underwritten $42.5 million of notes for CoreCivic and $101.3 million of notes for the GEO Group.

Wells Fargo has also been identified as one of the investors that own over one million shares in CoreCivic and GEO Group, dubbed as “The Million Shares Club” and targeted by Freedom to Thrive. As of its 2018 filings with the Securities and Exchange Commission, Wells Fargo owns 790,809 shares in CoreCivic and 646,930 shares in GEO Group.

In its 2018 Business Standards Report, Wells Fargo reported that as part of its environmental and social due diligence, its “credit exposure to private prison companies has significantly decreased and is expected to continue to decline.” In March 2019, shortly after a similar announcement by JPMorgan Chase, Wells Fargo CEO Timothy Sloan declared that the bank had decided in 2017 to end its business relationships with both CoreCivic and GEO Group. A bank's spokesperson later confirmed that “Wells Fargo has cut ties with CoreCivic and will do the same with regard to GEO Group when its current obligations expire”. It is unclear from the announcement what this would entail. Existing loan agreements with these companies will continue for a few more years, and the announcement did not mention the bank's continued investment in private prison companies.

Other Controversies

Wells Fargo is one of seventeen banks which have funded the Dakota Access Pipeline (DAPL). The pipeline would stretch over 1,172 miles through North Dakota, South Dakota, Iowa, and Illinois, and cost $3.78 billion to build. The company building DAPL is Texas-based Energy Transfer Partners. Although the project was approved in 2014, it has been facing protests for its potential environmental impact and the cultural significance of the region for the Standing Rock Sioux Tribe. The pipeline would run under Lake Oahe and protesters argue that the pipeline could put the tribe’s water supply at risk. The pipeline will also destroy the tribe’s sacred burial sites.

In 2016, Wells Fargo was fined $100 million by the Consumer Protection Bureau for creating over 2 million unauthorized checking and savings accounts and credit cards for its customers. The scandal was caused by an incentive-compensation program designed to increase sales, and led to the firing of 5,300 employees and $5 million in customer refunds.

In 2012, Wells Fargo entered a $175 million settlement agreement with the U.S. Department of Justice for allegedly discrimination against African-American and Latino borrowers from 2004 to 2009. Wells Fargo was also accused of steering African-American borrowers into higher-cost and higher-risk subprime loans, making foreclosure more likely. The Department of Housing and Urban Development (HUD) investigated Wells Fargo for racial discrimination and found evidence that Wells Fargo neglected homes within   African-American and Latino neighborhoods compared to white neighborhoods. Wells Fargo entered a $42 million settlement agreement with the National Fair Housing Alliance for the neglect of foreclosed homes in minority communities.

Economic Activism Highlights
  • On April 19, 2018, American Federation of Teachers President announced that the union would "cut ties" with Wells Fargo over the company's ties to the National Rifle Association (NRA). Wells Fargo manages approximately 20,000 AFT's members’ mortgages, but AFT will remove the bank from its list of approved lenders.
  • On December 13, 2017, Los Angeles City Council unanimously voted to approve the Request for Proposal for banking services contracts, which would disqualify the city from doing business with Wells Fargo because of its downgraded Federal Community Reinvestment Act Rating. Wells Fargo holds approximately $75 to $100 million of the City's operating funds.
  • On September 11, 2017, St. Peter's City Council voted to divest over $700,000 from Wells Fargo, due to the company's involvement in the Dakota Access Pipeline and fraudulent business practices.
  • On May 30, 2017, Berkeley City Council unanimously passed a plan to divest from Wells Fargo, citing the banks poor business practices, such as creating 2.5 million fraudulent accounts and financing the Dakota Access Pipeline. The contract is expected to end in May 2018.
  • On April 26, 2017, University of Wisconsin-Madison students passed a resolution to call for the university's divestment from private prisons and corporations that build border walls, naming Lockheed Martin, Raytheon, General Dynamics, Northrop Grumman, Honeywell, L-3 Communications, Boeing, Bank of America, JP Morgan Chase, BNP Paribas, Suntrust, US Bank Corp., and Wells Fargo.
  • On April 6, 2017, Philadelphia mayor submitted legislation to the city council to divest $2 billion in employee payroll from Wells Fargo. The mayor made the decision after Wells Fargo's recent bank practices that call into question the bank's financial ethics.
  • On April 5, 2017, the City Council of Portland, OR, voted to stop all new investment of city cash in corporate debt. "The vote followed hours of testimony from members of the public who said they did not want their tax dollars supporting corporations." While the decision impacts all corporate securities, companies that were specifically named during public testimony included Nestle, Wells Fargo, and Caterpillar.On April 3, 2017, Missoula City Council voted unanimously to divest from Wells Fargo, citing "shady business practices" and involvement in the Dakota Access Pipeline. The bank currently manages $3 million in city funds.
  • On April 4, 2017, Missoula City Council voted unanimously to divest from Wells Fargo, citing the banks "shady business practices" such as the fake account scandal and involvement in the Dakota Access Pipeline. The city currently has $3 million in city funds in Wells Fargo.
  • On March 20, 2017, D.C. Finance and Revenue Committee is considering a resolution to divest from Wells Fargo because of its involvement with the Dakota Access Pipeline and poor business practices, such as creating 2.5 million fraudulent accounts. Wells Fargo is D.C.'s "bank of record" and the city just renewed a $12 million, five-year contract with the bank.
  • On March 14, 2017, San Francisco’s Board of Supervisors voted unanimously to divest from banks financing the Dakota Access Pipeline, including Wells Fargo. About $1.2 billion of the city’s portfolio, nearly 14 percent, is invested with these 17 banks.
  • On February 22, 2017, Alameda City Council voted unanimously to refrain from investing in Wells Fargo for three years because of the city's involvement in the Dakota Access Pipeline and its "history of controversial practices" such as the bank's creation of 2.5 million fraudulent accounts. The city currently holds $36 million in general checking in the bank.
  • On February 17, 2017, New York City Mayor Bill de Blasio sent Wells Fargo CEO a letter threatening to divest from the company if Wells Fargo continues to finance the Dakota Access Pipeline.
  • On February 16, 2017, Santa Monica passed a motion to divest from Wells Fargo. The city currently has $1 billion in annual transactions and a portfolio that includes $4.6 million in Wells Fargo bonds
  • On February 15, 2017, East Orange City Council, in East Orange, New Jersey, passed a resolution to divest from Wells Fargo for its discriminatory lending practices, fraudulent accounts scandal, involvement in the Dakota Access Pipeline, and support of the Trump Administration.
  • On February 10, 2017, Davis City Council, in Davis, California, voted unanimously to divest from Wells Fargo, citing the bank’s involvement with the Dakota Access Pipeline and the creation of over 2 million fraudulent accounts. Wells Fargo currently provides the city $30 million in investments and $1 million cash balance.
  • On February 7, 2017, Seattle’s City Council passed an ordinance that requires the City of Seattle to commit to fair business practices and to not renew nor make new investments with Wells Fargo for a period of three years
  • On January 29, 2017, University of California decided to terminate $150 million interest reset contract and $300 million line of credit with Wells Fargo, after previously terminating $25 million commercial paper contract in November 2016. The decision was the result of protests by the Afrikan Black Coalition and the Prison Divestment Campaign
  • On October 18, 2016, Massachusetts suspended business with Wells Fargo for one year, removing the bank from a list of approved bond underwriters
  • On October 17, 2016, Ohio Governor John Kasich suspended Wells Fargo from doing business with state agencies for one year. Wells Fargo is excluded from issuing debt, bidding for financial services, or participating in state bond offerings
  • On October 3, 2016, State of Illinois and Chicago suspended investments with Wells Fargo for two years, citing the company’s creation of 2 million unauthorized accounts. Chicago is divesting $25 million from the bank, and Illinois is divesting $30 billion.
  • On July 19, 2016, City of Berkeley adopted a resolution to divest from private prisons and sent a letter to Wells Fargo, and other companies on the “Millions Share List” to divest from private prisons.
  • On February 22, 2016, Portland’s Social Responsible Investments Committee voted to recommend to the city to divest from Wells Fargo for its ties to private prison companies.
 
 
This profile was last updated on
18 July 2019