California Treasurer Continues Sanctions On Wells Fargo

SAN FRANCISCO (CBS SF) – Sanctions imposed by California State Treasurer John Chiang on Wells Fargo Bank for establishing up to 3.5 million bogus accounts will remain in place for a second year, Chiang announced on Monday.

Chiang wrote in a letter to the San Francisco-based bank, "Over the last year, Wells Fargo has made modest progress, but has ultimately fallen far short of re-tooling its approach to customer care and restoring public trust."

The sanctions set by Chiang include suspending investments by the treasurer's office in Wells Fargo securities; suspending use of the bank as a broker-dealer for purchase of investments; and suspending the bank as a managing underwriter for bond sales in which the treasurer appoints the underwriter.

Chiang announced the sanctions in September of last year after Wells Fargo acknowledged its employees established unauthorized accounts for customers. The bank originally set the number at 2.2 million unauthorized bank and credit card accounts, but in August revised the figure to up to 3.5 million.

Chiang noted that additional questionable practices have come to light in recent months. The bank has acknowledged that 490,000 customers were charged for unneeded auto insurance. It has also been accused of overcharging veterans under a federal mortgage refinancing program and denying student loans to undocumented young immigrants who have deportation deferments.

Chiang said that to show it has been rehabilitated, the bank must provide quarterly reports on its compliance with a consent decree in which it agreed to pay $185 million in fines to regulators, improve its procedures and reimburse customers who had unauthorized accounts.

The bank must also provide information about the affected customers and remove four directors from its board, Chiang said.

Bank spokesman Ruben Pulido responded, "Wells Fargo is in the business of banking, not politics.

"We will continue serving the state and rebuilding trust with Californians as we take steps to become a better bank, regardless of politics," Pulido said.

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