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California Treasurer decries Wells Fargo's 'wanton greed,' suspends business relations


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California Treasurer decries Wells Fargo's 'wanton greed,' suspends business relations

issuspended from participating in certain business relationships with the Stateof California for the next 12 months.

Accordingto a Sept. 28 news release from the office of California State Treasurer JohnChiang, the sanctions are in response to the discovery of the company's illegalopening of more than two million customer accounts.

Effectiveimmediately, California will suspend investments by the Treasurer's Office inall Wells Fargo securities, suspend the use of Wells Fargo as a broker-dealerfor purchasing of investments by the California State Treasurer's office, andsuspend Wells Fargo as a managing underwriter on negotiated sales of Californiastate bonds in cases where the state treasurer can choose the underwriter.

In the newsrelease, Chiang called the illegal-accounts scandal a "legal and ethicaloutrage that cannot go unpunished," adding that the company displayed a"reckless lack of institutional control" and actively promoted aculture of "wanton greed."

The releasealso included parts of a letter Chiang sent to Wells Fargo Chairman and CEOJohn Stumpf announcing the decision.

"Integrityand trust matter," Chiang wrote. "How can I continue to entrust thepublic's money to an organization which has shown such little regard for thelegions of Californians who have placed their financial well-being in itscare?"

TheCalifornia State Treasurer also warned that should Wells Fargo fail to complywith consent orders and other sanctions imposed by other , the state would considerimposing tougher sanctions, which could include the permanent severance of allbusiness dealings between the treasurer's office and Wells Fargo.  

Furthermore,Chiang stated that he would work with the California Public Employees'Retirement System and the California State Teachers' Retirement System to pushfor reforms in Wells Fargo itself, which include the separation of the chairmanand CEO positions, a review of the company's compensation policies, on compensation forexecutives with close ties to the accounts incident, as well as the establishmentof an internal reporting system where ethical and legal violations can bereported anonymously. Chiang also wants the company to appoint a consumerombudsman, or if such a position already exists, for the company to provide adetailed report on the scope and authority of the role.  

The twopension funds have combined investments of $2.3 billion in Wells Fargofixed income securities and equity.