Treasurer John Chiang says in letter to Wells Fargo’s John Stumpf, board that he’s ordered suspension of WFC’s participation in “its most highly profitable business relationships” with California.
The California Treasurer oversees ~$2t in annual state banking transactions; manages $75b investment pool; is largest U.S. issuer of municipal debt
- Sanctions include:
- Suspending investments by Treasurer’s office in all WFC securities
- Suspending using WFC as broker-dealer for purchasing investments
- Suspending WFC as managing underwriter on negotiated sales of Calif. state bonds (where Treasurer appoints underwriter)
- Sanctions take effect immediately, will remain in place for next 12 months
- WFC may face tougher sanctions “up to and including complete and permanent severance of all ties” with Treasurer’s Office if WFC fails to demonstrate compliance with consent orders or “evidence surfaces” has engaged in same behavior
- Calif. will work with Calpers, Calstrs to pursue governance reforms ensuring “this type of behavior and systemic corruption” doesn’t reoccur
- Notes the 2 pension systems have >$2.3b invested in WFC fixed income securities, equity
- Chiang will seek:
- Separation of CEO/chair positions
- Appointment of consumer ombudsman
- Development of anonymous ethics reporting process/whistleblower protection program
- Review of WFC compensation practices
- Clawbacks
- WFC admission thousands of bank employees opened >2m fraudulent consumer accounts is “a legal and ethical outrage that cannot go unpunished": Chiang
- ‘‘How can I continue to entrust the public’s money to an organization which has shown such little regard for the legions of Californians who have placed their financial well-being in its care?”
It appears Rounds 1 and 2 have gone to Elizabeth Warren.
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