Most of the nonprofit businesses that I work for in the Philadelphia area use Wells Fargo as their primary bank. I’m not quite sure how that happened; it was not a deliberate choice on my part of saying to these boards “hey guys: let’s all use the same bank so that it will make my job as accountant easier”. But that’s the way it turned out and it does make my work easier. My collective knowledge of the bank’s operations and my personal relationship with the bank’s key personnel is actually an asset to these business clients.
Wells Fargo has provided excellent customer service and has offered top-notch products and services to me and my clients over the years. But the company has been in the news for bad management practices that led to over-aggressive sales practices and the opening of up to 3.5 million fake or unwanted customer accounts.
Now a new scandal has emerged. Yesterday a new lawsuit filed titled ‘City of Philadelphia v Wells Fargo & Co et al, U.S. District Court, Eastern District of Pennsylvania, No. 17-02203′ alleges massive predatory lending practices. I’m not familiar with the action and am not commenting on the merits of the case. There are aspects in the first news coverage that raise the question about whether this was an opportunistic action motivated primarily by plaintiff attorneys and not a cry for help by victims or city leadership. I haven’t read any coverage from a victims’ perspective. In any event. this is one more public relations black eye for Wells Fargo.
Bad banking practices certainly are not unique to any one bank. In fact, I’ve blacklisted two other banks in the Philadelphia area and refuse to work with them on any new client accounts. One bank was actually mishandling client funds. When I turned over evidence to the Pennsylvania Department of Banking a few years ago they responded by saying that they don’t have the resources to investigate. The other had such a poor relationship between the bank staff and the third-party online banking technical services provider that it hurt customers.
It makes sense for the boards of these nonprofit businesses to ask whether their bank is a good social/political fit for their business. The choice of bank is a significant factor to the long-term success of a nonprofit business. It is possible that some board members are already soured by the news they’ve already heard and ready to leave Wells Fargo. It is also possible that Wells Fargo may take some remediation steps to repair its tarnished reputation that could actually benefit these nonprofit clients in the long-term.
At this point I do not know and so I have no recommendation. But I will watch the situation as it unfolds in coming months.