Illinois suspends investments with Wells Fargo

Erica Snow, Assistant City Editor

Illinois will cease investments and business relations with Wells Fargo for at least a year, the state treasurer announced Monday.

According to a news release, Wells Fargo “improperly opened” 2 million bank accounts nationwide without consumers’ knowledge between 2011 and 2015. The bank also charged improper fees, ruining credit scores and forcing consumers to pay higher interest rates, the treasurer said.

Illinois state treasurer Michael Frerichs suspended $30 billion in investment activity. The treasurer oversees nearly $1 trillion total in investment activity for the state.

“Their illegal actions to meet sales targets and compensation incentives is downright shameful,” Frerichs said at a news conference on Monday.

Frerichs authorized an audit to investigate whether the opening of 2 million illegal accounts complied with an Illinois law to return unclaimed property to consumers and to figure out where money is due to beneficiaries.

The bank also improperly repossessed more than 400 vehicles from active duty military personnel and charged more than the 6 percent interest rate, Frerichs said.

“We have a choice where we invest taxpayer money,” Frerichs said in the release. “We will not reward companies that irresponsibly open new bank accounts and improperly repossess vehicles of members of our armed forces.”

A Wells Fargo spokesperson pointed to the relationship the state and the bank have had since 1970.

“We are very sorry and take full responsibility for the incidents in our retail bank,” Gabriel Boehmer, a Wells Fargo spokesperson, said in a statement. “We have already taken important steps, and will continue to do so, to address these issues and rebuild the state’s trust.”

After one year of state inactivity with Wells Fargo, an “evaluation of Wells Fargo corporate governance practices” will determine if the state will resume banking relations.

This is not the first time Wells Fargo has been under scrutiny from the state. In 2012, the state attorney found more than 3,000 black and Latinx Illinois residents were subject to discrimination and received risky loans from the bank. A joint settlement of $175 million for consumers was reached.

“Wells Fargo is a big financial player in Illinois and I hope to send a message that their unscrupulous practices are not welcomed and will not be tolerated,” Frerichs said at the news conference.

Illinois state Sen. Jacqueline Collins (D-Chicago) said this “corporate greed” was frustrating and detrimental to consumers.

“What is even more outrageous than the conduct recently brought to light is the fact that we’ve heard this story before: financial institutions claiming they’re too big to be held accountable, while low-level employees take the blame,” Collins said at the news conference. “High level executives evade the consequences, and working families suffer from the misdeeds of others.”

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