When Wells Fargo & Co. of San Francisco bought ailing Wachovia Bank (previously known as First Union) a few years back, the national banking giant inherited old Philadelphia city financial data and services relationships that dated back to predecessor Philadelphia National Corp. and the dawn of online financial data. (When the former Commerce Bank went too far in challenging those sometimes no-bid city-bank relationships, two executives went to prison.)
But now City Councilman James F. Kenney is asking whether Wells Fargo is still the best bank to handle Philadelphia taxpayer money. In a letter to Councilman Bill Green, Kenny points out that Wells Fargo is among the banks that sold the city interest-rate swaps that were supposed to protect the city from rising interest rates but ended up costing the city millions as rates fell. (Kenney also trashes Wells Fargo as "a major funder of the pay day loan industry," which charges workers high weekly payments for short-term loans.)
With the city's payroll banking contract up for renewal tomorrow May 9, Kenney suggests "we use this opportunity to ask Wells Fargo about their record of businesss integrity and community stewardship before we reward them with our continued business."
UPDATE: "Wells Fargo has enjoyed a long-standing relationship with the City of Philadelphia due to its financial expertise and outstanding service. We continue to be among the city’s top corporate donors, supporting non-profits that benefit Philadelphia residents. Wells Fargo is proud to stand on its record," said spokeswoman Barbara Nate.
EARLIER: If not Wells Fargo, who? "PNC and TD Bank also applied" to handle city payroll, Kenney told me. They are less associated with swaps, compared to Wells Fargo. He says he wants healthy competition for city contracts: "They should all interview for our business."
Should local banks or banks with cleaner records get extra credit when they go for city business? "Some banks are more evil than others," Kenney said. Speaking of which, he added: "Why did the mayor have to go and hire JPMorgan to sell the Gas Works?"