In aftermath of the Wells Fargo scandal, California treasurer John Chiang suspended some state business with the San Francisco-based bank.
“I have suspended three lines of business—the most highly profitable business lines for Wells Fargo—in their engagement with the state of California,” Chiang said during an interview on the FOX Business Network.
Chiang explained why he made the decision, citing the absence of good conduct from the financial institution.
“We want to incentivize much stronger, better behavior by Wells Fargo,” he said. “They breached a very important trust with the customers of California and elsewhere. People put their hard-earned dollars in trusts with them. They want to grow, they want long-term strategies for financial security and unfortunately what we witnessed was otherwise.”
He added: “Clearly, something went wrong with their dedication to their mission. You had a culture that ran amuck and what happened to the values of protecting and enhancing the financial security of their customers? So we want to make sure progress is made on that front.”
The first step Chiang would like to see the bank take is to admit its guilt, followed by an explanation of what Wells Fargo will do to change their corporate culture and practices.
“At the heart of this, they have to reestablish trust. We know that it takes a long period of time to establish trust and so that’s by engagement, that’s by practice, that’s by spoken word, that’s by being an example of great behavior, good service, community participation, and they broke it. And they broke it big time,” the California treasurer added.
Chiang added: “People are incredibly disappointed. They were impacted severely and so they’re going to have to immediately address all those issues, admit the problems they concerned and come up with a course of corrective action… We [California] have a very serious relationship [with Wells Fargo], and so I want them to succeed in making sure that they provide capital for small businesses in the state of California, that they help finance affordable housing.”
Wells Fargo CEO John Stumpf addressed the steps the bank is taking to correct its alleged illegal retail sales practices during an appearance before the House Financial Services Committee on Thursday.