DALLAS -- Ohio became the latest bond issuer to suspend doing business with Wells Fargo & Co. over its phony accounts scandal.
Ohio Gov. John Kasich said on Friday he would suspend state and state agency bond and financial services business with Wells Fargo. Wells Fargo has a limited retail banking presence in the state but it does regularly seek state bond business.
The ban is effective for at least one year. Kasich will revisit the decision in the coming year if the company makes progress in restoring what he described as a culture of integrity.
Kasich is taking the action in response to the recent news that Wells Fargo engaged in business practices that drove employees to create more than two million new accounts without customers' knowledge or authorization in order to generate new fee revenue. As a result, the bank was fined $185 million by the federal government and more than 5,000 employees were fired for the practice. Wells Fargo CEO John Stumpf resigned in the aftermath of the scandal.
"This company has lost the right to do business with the state of Ohio because its actions have cost it the public's confidence," Kasich said in a press release. "Policymakers' first instinct in these situations is often to just write another law, but we've seen that that doesn't always make a difference. We need to send a message to this company—and every other company—that the public must be respected, that ethical standards must be respected and when they're not it comes with a cost."
The Ohio suspension follows similar moves by Chicago, California and Illinois.
In a statement, Wells Fargo stressed the separation between its commercial bank and government services groups and said it hoped to restore the state's business. "Wells Fargo values the state of Ohio's business and will fight to earn it back," said Gabriel Boehmer, a spokesman for the firm's government & institutional banking group. "Wells Fargo manages its business with the state of Ohio in business lines that are separated from our retail bank."
The bank operates one Ohio branch. Boehmer said the firm contributed $1.1 million to nearly 145 Ohio nonprofits and schools last year and an additional $374,982 was donated to Ohio schools through Wells Fargo's team member matching grants program while the firm's Ohio team members contributed $176,750 through an annual community support and United Way Campaign.