Chiang extends Wells’ sanctions
The state of California will continue its financial sanctions against Wells Fargo for a second year following a string of new disclosures about bad practices at the bank since its sham accounts scandal unfolded.
State treasurer and gubernatorial candidate John Chiang said Monday that revelations of wrongdoing at multiple business units have undermined confidence in the San Francisco bank, which also has failed to complete necessary reforms.
“The opaque manner with which the bank continues to do business and the frequency of new disclosures of wanton greed and lack of institutional control makes this decision so clear that there really was no choice at all,” he said in a statement.
The sanctions suspend investments by the treasurer’s office in Wells Fargo securities, bar use of the bank as a broker-dealer for the purchase of investments and bar the bank as a managing underwriter for bond sales in which the treasurer has the authority to appoint the underwriter.
The measures were imposed in September 2016, just weeks after the bank agreed to a $185-million settlement with regulators for creating millions of unauthorized checking, savings and other accounts. The next month, then-CEO and Chairman John Stumpf was ousted.
The bank issued a statement that it has “met and exceeded all of Treasurer Chiang’s expectations” and cited a list of initiatives it has undertaken, including separation of chief executive and chairman positions, and expansion of a customer complaint-resolution process.
Cited by Chiang in making his decision to continue the sanctions were disclosures the bank overcharged veterans in a federal mortgage refinancing program and charged auto loan borrowers for insurance they didn’t need. He called on federal regulators to expand their inquiry into the bank.
In a letter sent Monday to the Wells Fargo board and CEO Tim Sloan, Chiang made several demands that he said must be met before he would retract the sanctions. They included removing remaining board members who had watchdog positions during the accounts scandal.
A department official estimated last year that the bank earned several million dollars annually in state brokerage and underwriting fees, a mere fraction of the bank’s annual profit, which totaled $22 billion in 2016.