Following in the footsteps of Illinois and California, the state of Ohio has become the latest to take a break from doing business with Wells Fargo until the dark cloud of the current fake account fiasco passes.
Gov. John Kasich broke the news on Friday that the state will take a one-year break from allowing Wells Fargo to take part in new state debt offerings and financial services contracts initiated by state agencies under his authority. Kasich is also asking to exclude the bank from participating in debt offerings initiated by the Ohio Public Facilities Commission (OPFC).
As you’re likely well aware, Wells Fargo was recently ordered to pay $185 million after thousands of bank employees were caught trying to game the Wells sales goal system by opening more than two million unauthorized accounts in customers’ names.
However, questions remain about how long this bad behavior went unchecked and why Wells’ top brass did not change the underlying incentive programs until after the massive settlement was made public. CEO John Stumpf, who announced his sudden retirement earlier this week, recently told members of Congress that he first learned about this chicanery in 2013.
Additional documents turned up this week appear to indicate that local managers warned the company’s ethics hotline and the bank’s former head of Wells’ retail banking, Carrie Tolstedt, of problems with fake accounts more than 10 years ago. Tolstedt also offered her instant retirement shortly before the bank reached the settlement agreement.
“It’s clear that Wells Fargo’s culture was compromised by greed and by a desire to make money that was stronger than a commitment to following proper ethical standards,” says Kasich in a statement. “While Wells Fargo only does limited retail banking in Ohio, it does regularly seek state bond business so I have instructed my Administration to seek services from other banks instead, and I’ll cast my votes against Wells Fargo on the Public Facilities Commission.”
Kasich says Wells has given up its right to do business with the state “because its actions have cost it the public’s confidence.” That said, the governor and former Presidential candidate says he open to revisiting the relationship after Wells makes internal improvements.
In late September, California became the first state to halt doing business with Wells, with the state’s treasurer citing the bank’s “venal abuse of its customers.”
That move was followed by an announcement from the Illinois state treasurer that the state would suspend billions of dollars in investment activity with Wells.