The board of New York's Metropolitan Transportation Authority on Wednesday approved its new list of bond underwriters while holding back the application of Wells Fargo Securities as a senior manager pending its own investigation of the bank's practices.
"We're not approving Wells Fargo today," chief financial officer Robert Foran told board members at the monthly meeting in lower Manhattan.
Federal prosecutors launched a preliminary inquiry into sales practices at parent Wells Fargo after revelations that thousands of its employees secretly created accounts without clients' approval. The Consumer Financial Protection Bureau fined Wells Fargo $185 million in penalties earlier this month over 2 million bank and credit card accounts that may not have been authorized by customers.
Bank chief executive CEO John Stumpf will forfeit $41 million under a clawback policy that the bank's board members invoked last week.
MTA approval of Wells Fargo Securities as one of seven senior managers is pending a so-called responsibility review, according to Foran. He gave no timetable.
"We will do an analysis and if we determine that we think that Wells Fargo is a responsible party, we'll make our analysis available for the board to consider," said Foran. "Then we'll bring Wells Fargo's selection back before the board so the board can consider it and then vote upon it."
Board member Charles Moerdler said he supported the caveat but recused himself. The board, without debate, approved the motion unanimously on a voice vote.
Approved as senior managers were Goldman, Sachs & Co.; Bank of America Merrill Lynch; Ramirez & Co.; Citigroup; Siebert Cisneros Shank & Co. LLC; and JPMorgan. The board also approved a plethora of senior co-managers, co-managers and selling group members.
The MTA is one of the largest municipal issuers with $37.5 billion in debt.
Chairman Thomas Prendergast said the authority is still targeting a Dec. 31 opening of the Second Avenue subway line, a long-delayed megaproject intended to alleviate crowding on the north-south Lexington Avenue corridor along Manhattan's East Side. The $4.5 billion initial phase involves four stations from 63rd to 96th streets.
"It's a date that we've held for seven years," Prendergast told reporters after the meeting. "We're not moving off it now."
Speaking on Monday at the board's capital program oversight committee, independent engineering consultant Kent Haggas of McKissack Group Inc. said unfinished work at the 72nd Street and 86th Streets could delay the opening. Haggas said work on elevators, escalators and other mechanical and electrical equipment needs to improve.
Prendergast, who rose through the MTA's ranks as an engineer, acknowledged a degree of difficulty in coordinating four new stations.
"The whole is going to be greater than the sum of the parts," he said. "You can do each individual part correctly but you're not there until you actually do the integrated testing to be able to verify that everything's being done.
"You're not there until you're there."
The board also approved a fare increase of roughly 6% for riders of Metro-North Railroad's New Haven line, which runs from Grand Central Terminal through parts of southern Connecticut.
MTA and the Connecticut Department of Transportation operate the rail line jointly.
Board member Veronica Vanterpool voted against the hike. Fares along that line, she said, have risen 21% over four years.
"The state of Connecticut needs to get serious about funding its transportation system," said Vanterpool, the executive director of the nonprofit Tri-State Transportation Campaign. "After four consecutive legislative sessions in Connecticut, they've still not fully addressed their lockbox legislation."
New Yorkers are also affected, she said, given that the New York-to-Stamford is the largest reverse commute in the country.
