Wells Fargo removed as Mass. Treasury underwriter
Massachusetts Treasurer Deb Goldberg has instructed her debt management deputies to immediately remove Wells Fargo from their approved list of underwriters for one year.
Four Massachusetts congressmen on Monday implored Goldberg to cut Treasury business ties with the bank. Congressman Stephen Lynch and three of his colleagues said in a letter that Wells Fargo is the trustee for a state deferred compensation plan and said "it appears that there are multiple relationships between the state and Wells Fargo."
The federal Consumer Financial Protection Bureau in September slapped the bank with a $100 million fine for "widespread unlawful sales practices." It was the largest fine ever issued by the agency, which said the bank would also pay an additional $35 million penalty to the Office of the Comptroller of the Currency and $50 million to the city and county of Los Angeles. Under fire for the bank's actions in the scandal, Wells Fargo chairman and CEO John Stumpf resigned this month.
According to the bureau, bank employees secretly opened accounts and shifted funds from consumers' accounts into the new accounts without their knowledge or permission. The bank also had compensation programs for employees that encouraged them to sign up existing clients for deposit accounts, credit cards and online banking without their knowledge.
"The Treasurer isn't convinced that Wells Fargo has grasped the level of seriousness of their actions nor have they addressed systemic failures within their organization," Chandra Allard, a Goldberg spokeswoman, said in response to a News Service inquiry. "And because of that we have begun to take action. As her first step, the Treasurer has instructed her Assistant Treasurer of Debt Management to immediately remove Wells Fargo from the approved list of underwriters for a term of 1 year."
The move could cost Wells Fargo between $500,000 and $1.5 million in business, depending on the bank's level of activity as an underwriter of Commonwealth debt deals, according to the Treasury.
On Monday, U.S. Reps. Stephen Lynch, Michael Capuano, Katherine Clark and James McGovern urged Goldberg to sever Treasury ties with Wells Fargo.
According to Allard, Goldberg two weeks ago instructed Treasury staff to review contracts, investments and other relationships that Massachusetts may have with the bank. The amount of business Wells Fargo has with state government was not available Tuesday, though Allard said, "What we do know is our exposure is extremely limited compared to other states."
According to the CFPB, illegal sales practices at Wells Fargo dated back at least five years and included using consumer names and information to create hundreds of thousands of unauthorized accounts. The bureau's Sept. 8 order required Wells Fargo to pay full refunds to affected customers.
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