Fresh on the heels of L.A. City Attorney Mike Feuer’s legal victory over Wells Fargo Bank, the State of California suspended some of its business with Wells Fargo.
In an unprecedented move, the State treasurer, John Chiang, pulled much of the State of California’s banking, including large municipal bond deals and the State’s investments in securities, from Wells Fargo.
The State of California put some of its dealings with Wells Fargo on hold for at least one year and will monitor the bank’s adherence to the terms of a consent order it signed with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. The business relationship between the State and Wells Fargo might be restored after one year provided the bank proves its commitment to ethical business practices.
Let’s hope that the loss of the bank’s most profitable business relationship will force San Francisco-based Wells Fargo to reevaluate its business practices as well as its current leadership and possibly even its governance structure. (John G. Stumpf, is currently both, Wells Fargo’s CEO and chairman.)