California, the nation’s largest issuer of municipal bonds, is barring Wells Fargo & Co. from underwriting state debt and handling its banking transactions after the company admitted to opening potentially millions of bogus customer accounts.
The suspension, in effect immediately, will remain in place for 12 months, State Treasurer John Chiang said Wednesday. “Complete and permanent severance” between his office and the bank will occur if it doesn’t change its practices, he said. The treasurer is also suspending his office’s investment in Wells Fargo securities.
“Wells Fargo’s fleecing of its customers by opening fraudulent accounts for the purpose of extracting millions in illegal fees demonstrates, at best, a reckless lack of institutional control and, at worst, a culture which actively promotes wanton greed,” the treasurer said in a statement.