Originally published on sdjewishjournal.com
By Natalie Jacobs
Senator Elizabeth Warren isn’t the only public figure who is outraged by Wells Fargo’s deceptive banking practices. Today, California State Treasurer John Chiang announced that his office will place the bank on a 12-month suspension from three main business areas of the state’s public pension funds. In a press conference held in San Francisco, where the bank is headquartered, Chiang questioned his ability to trust the bank after it “illegally extracted millions of dollars” from individuals across the country. Chiang said Wells Fargo’s predatory business practices were a “legal and ethical outrage” that “must be denounced publicly in the strongest terms.”
Chiang oversees nearly $2 trillion in annual banking transactions for the state of California. He also serves on the governing board of the nation’s two largest public pension funds, the California Public Employee’s Retirement System and the California State Teachers’ Retirement System, which are included in the Wells Fargo suspension.
The California State Treasurer’s announcement comes nearly three weeks after the Consumer Financial Protection Bureau announced its $185 million fine for the unauthorized opening of consumer bank accounts. Wells Fargo’s CEO and Chairman of the Board John Stumpf offered testimony to the Senate Banking Committee on Sept. 20 in which he apologized and accepted full responsibility for the problem, after 5,300 low-level employees were fired for their involvement in the scandal.
During that testimony, in her 17-minute questioning of Mr. Stumpf, Senator Elizabeth Warren noted that the personal value of Stumpf’s average 6.75 million shares of Wells Fargo stocks during the years that the scandal was going gained about $200 million. The video of Warren’s questioning has been watched by 11 million people online since it was posted to her Facebook page eight days ago. On Tuesday, Wells Fargo announce that Stumpf will give back about $45 million in compensation as a result of this scrutiny.
“Disappointment is an understatement as to his response [in the senate testimony],” Treasurer Chiang said in today’s press conference.
The Treasurer’s announcement included suspension of California’s investment in all Wells Fargo securities, suspension of Wells Fargo as a broker for state pension plans, and suspension of Wells Fargo as a negotiated underwriter of state bonds.
While he admitted that the money Wells Fargo will lose in transactions and management of pension funds from California will be a drop-in-the-bucket for the company, which posted $22 billion in revenue in just the second quarter of this year, Chiang said his actions on behalf of the state are intended to show Wells Fargo customers that “someone has their back.” If Wells Fargo doesn’t comply with the details of their settlement with the Consumer Financial Protection Bureau, Chiang said that could lead to complete termination of California’s business with the bank.
California is the first state to announce such sanctions on Wells Fargo in the aftermath of the CFPB fine. Though he hasn’t been in contact with other states about his decisions, Chiang said he thinks others should act their conscience and consider taking similar actions against the bank.