The state of California will stop doing some business with Wells Fargo, after revelations that the bank created fake accounts under customers’ names to boost profits. State treasurer John Chiang’s move could be largely symbolic.
The treasurer announced his office will stop investing in Wells Fargo products, or using the bank as an underwriter on state bonds and the broker-dealer for investments, all for at least a year. Wells handled hundreds of millions of dollars in those transactions last year, but banking analyst Nancy Bush says it makes relatively little from them.
"They tend to be pretty thinly priced," says Bush.
She says the real damage will be to the bank’s image.
"It’s bad. Let’s just put it that way. It’s bad to lose a major relationship in the state in which you are headquartered."
It could be good for the treasurer. Chiang is running for governor, and the highly-publicized, bank-bashing move could help his profile.