California justice
State biz nixed 1 yr. for Wells ‘fleecing’
Yet another wheel has come off the stagecoach.
California — Wells Fargo’s home state — has suspended all business ties with the bank for a year, the state’s treasurer announced Wednesday.
The shocking shaming deals another blow to Chief Executive John Stumpf in the wake of the fake-account scandal that has imperiled his position.
A damning announcement by Treasurer John Chiang also demanded that the company separate the CEO and chairman positions — a move that shareholder activists have long sought to foster greater board independence.
“Wells Fargo’s fleecing of its customers by opening fraudulent accounts for the purpose of extracting millions in illegal fees demonstrates, at best, a reckless lack of institutional control and, at worst, a culture which actively promotes wanton greed,” Chiang said in a statement.
Chiang oversees roughly $2 trillion in total banking transactions a year, but it’s unclear how much of that sum the bank gets from state business. The bank declined to answer questions about the size of the business.
Warren Buffett’s Berkshire Hathaway, which holds nearly a 9.5 percent stake in the bank, remained silent on the news.
The announcement comes just one day after the company told employees it was clawing back $41 million from Stumpf in back pay, and that he wouldn’t receive a bonus this year.
Carrie Tolstedt, the executive who oversaw community banking and was directly responsible for the opening of about 2 million sham accounts and 565,000 credit cards, also will have $19 million in unvested stock clawed back. She left the bank with about $125 million.
The sham accounts were detailed as part of what led to a $185 million settlement with federal and state regulators.
Stumpf, 63, will face a grilling before the House Financial Services Committee on Thursday.