CHICAGO (CBS) — Illinois State Treasurer Michael Frerichs has suspended $30 billion in state investments with scandal-plagued Wells Fargo, after the bank admitted employees boosted sales figures by creating millions of unauthorized accounts in its customers’ names without their knowledge.
“Wells Fargo is a big financial player in Illinois, and I hope to send the message that their unscrupulous practices are not welcome and will not be tolerated,” he said. “With the dramatic failure of corporate controls and oversight, I have also ordered an audit to determine if – in addition to their other illegal activities – Wells Fargo violated Illinois’ unclaimed property laws,”
Frerichs said Wells Fargo’s predatory and illegal banking practices forced him to cut the state’s ties with the bank for now.
“During this five-year period, the company extracted millions of dollars in fraudulent fees, and damaged many customers’ credit records, forcing them to pay higher interest rates on loans. Their illegal actions to meet sales targets and compensation incentives is downright shameful,” he said.
The move will cost Wells Fargo millions of dollars in fees.
Frerichs’ announcement came a day after U.S. and California regulators fined the San Francisco-based company $185 million.
The company has issued a public apology:
“We certainly understand the concerns that have been raised. We are very sorry and take full responsibility for the incidents in our retail bank. We have already taken important steps, and will continue to do so, to address these issues and rebuild the state’s trust,” the company said in a statement on Monday.