Illinois suspends business with Wells Fargo

Wells Fargo (WFC) is losing another big business customer: The state of Illinois.

Illinois Treasurer Michael Frerichs said Monday his office is suspending its annual $30 billion in investment activity with Wells Fargo for at least one year. The office oversees more than $1 trillion in transactions annually, Frerichs says, and Wells Fargo stands to lose "millions of dollars" in investment fees from the action.

"Wells Fargo is a big financial player in Illinois, and I hope to send the message that their unscrupulous practices are not welcomed and will not be tolerated," Frerichs said during a news conference.

The repercussions come in the wake of Wells Fargo's agreement last month to a $185 million civil settlement for restitution and fines after admitting that employees had opened accounts not authorized by customers. Wells Fargo says it has reimbursed fees incurred and fired more than 5,000 employees.

Since that settlement was announced, the Labor Department has begun an investigation into the bank's labor practices.

Also in recent days, Senate and House committees have grilled Wells Fargo CEO John Stumpf, and he has agreed to give up $41 million in unvested stock awards following the board of directors' investigation. Wells Fargo is one of the nation's largest banks.

Frerichs' action follows the proposal Friday from two Chicago aldermen that the city ban doing business with Wells Fargo for the next two years.

The state will also audit all other business it does with Wells Fargo, Frerichs said.

“We certainly understand the concerns that have been raised," Wells Fargo said in a statement. "We are very sorry and take full responsibility for the incidents in our retail bank. We have already taken important steps, and will continue to do so, to address these issues and rebuild the state’s and city’s trust.”

Wells Fargo's government & institutional banking division, separate from the retail bank, has worked with the state and city since 1970, the bank said.

Illinois' action is the latest fallout from the scandal. Last week, California Treasurer John Chiang said the state would suspend several of its key banking relationships for 12 months to sanction the firm following allegations of "fleecing its customers."

Also last week, the New York Metropolitan Transportation Authority opted not to include Wells Fargo among banks pre-authorized for underwriting bonds as part of its regular three-year process. Instead, the MTA staff will review Wells Fargo's business practices before making a recommendation to the board.

 

 

USA TODAY


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