For Wells Fargo, California is no longer a prospect or business friendship.
Since the Wells Fargo scandal began, California has taken some big hits. And now, it seems like a bigger one comes by way of reputation.
During a scandal-proof separation, California’s State Treasurer John Chiang placed Wells Fargo in a position which will beg of redemption.
Wells Fargo Gets “Chopped”
According to CBS Los Angeles, Chiang has severed the State of California’s ties with Wells Fargo bank, as far as investments are concerned anyway.
The source notes that the financial sanction isn’t indefinite. Matter of fact, it’s only for 12 months.
According to NBC Bay Area, sanctions include the following.
- Suspending investments by the Treasurer’s Office in all Wells Fargo securities
- Discontinuing Wells Fargo as a broker-dealer for buying investments
- Halting Wells Fargo employment as a managing underwriter via negotiated sales of California state bonds, in contracts where the treasurer appoints the underwriter
The Atlantic reports the following quote from California Treasurer Chiang regarding the Wells Fargo scandal.
“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?”
The source notes Chiang’s announcement as a response to the “ethical outrage” via Wells Fargo’s 2 million fraudulent accounts.
While these fraudulent accounts were only fractional in the grand scheme of the company, California is taking no part in Wells’ unethical behavior regardless of the depth.
Wells Fargo Scandal Causes More Financial Hits
Since the scandal occurred, federal and California regulators have fined Wells $185 million due to “fraudulent practices,” says the Atlantic.
Also, Wells Fargo CEO John Stumpf recently announced he would forfeit $41 million in stock awards and his annual bonus.
Do you think that’s still “chump change” to him?
Furthermore, the source reports that, according to Consumer Watchdog’s Jaime Court, this move by California’s treasurer isn’t one that’ll financially hurt the bank.
Wells Fargo is a multi-billion dollar conglomerate. What’s one client, right?
Well, this “one client” holds $75 billion in investments with Wells. NBC Bay Area reports that Chiang oversees $2 trillion in California’s banking transactions overall.
On a bigger scale, this is larger than “just the State.”
The Wells Fargo Reputation On The Line
California is home to several celebrities. And just as Chiang mentioned, as Californians, some of these individuals hold accounts with Wells.
Although celebrities are seen as social leaders, many times they’re just as influential as the next person.
If they see the State of California as a government entity pulling out of Wells Fargo, with all of its millions invested, what makes anyone believe these celebrities — of whom also have millions tied into Wells — won’t “follow the leader”?
Apologies From Wells
NBC Bay Area reports that a bank spokesperson, Ruben Pulido, made a public statement regarding Wells Fargo’s accountability in the matter.
“We regret and take full responsibility for the incidents in which customers received a product they did not request, as that is consistent with the values and culture we strive to live up to every day. We are very sorry and take full responsibility for the incidents in our retail bank.”
The source marks California as the United States’ largest issuer of municipal bonds. Likewise, it notes Wells Fargo as the second largest issuer of municipal debts.
All in all, it’s just a 12-month sanction, right? Do you think it will be extended and ties will be permanently cut between California and Wells? Is it even possible for Wells Fargo to bounce back at this point or any point in the future? Feel free to share your thoughts below.
[Featured Image by Joe Raedle/Getty Images]