SPRINGFIELD, Ill.—Illinois has become the second state to sanction Wells Fargo Bank.
Illinois State Treasurer Michael Frerichs announced that the state will sanction Wells Fargo after learning of its fraudulent business practices.
As CUToday.info previously reported, in the wake of the Wells Fargo scandal late last month California’s treasurer, John Chiang, said the state will suspend many of its relationships with Wells as the result of what he called “venal abuse of its customers.”
The State of Illinois stated that it will suspend business with the bank for at least one year. Frerichs said the move could cost Wells Fargo “tens of millions” in fees and commissions. However, Wells Fargo said the sanctions will likely cost closer to $50,000, LowCards.com reported.
Wells Fargo has acknowledged that thousands of its employees created more than two million fake accounts that damaged customers’ credit scores an led to millions of dollars in service fees, but has denied that management was involved.
Regarding Illinois decision, Wells Fargo said it will work to restore the state’s trust.
“We certainly understand the concerns that have been raised,” the bank said in a statement. “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.”
While the sanctions will be costly to Wells Fargo, Frerichs said he does not expect the suspension to cost Illinois any money, as they work with 50 other approved broker-dealers that can replace Wells Fargo. Last year, Wells Fargo handled about $30 billion of an estimated $1 trillion in state investment activity, LowCards.com reported.
The state is also undergoing an investigation to see if Illinois residents are owed any money from Wells Fargo. Frerichs is also asking the Illinois State Board of Investment to re-evaluate any state pension investments held with the bank, LowCards.com explained.