Ohio suspends doing business with Wells Fargo

Posted at 8:46 AM, Oct 15, 2016
and last updated 2016-10-15 08:46:12-04

NEW YORK -- Ohio's Republican Gov. John Kasich announced Friday that he was suspending Wells Fargo from doing business with state agencies, and excluding the bank from participating in any state bond offerings.

Kasich's announcement follows similar moves by the state treasurers of California and Illinois and the cities of Seattle and Chicago, which said earlier this month they were banning Wells Fargo from doing business. The San Francisco-based bank has been under fire after allegations came to light that Wells employees may have opened up to 2 million customer accounts fraudulently in order to meet sales goals.

While the scandal has drawn bipartisan outrage, particularly from members of Congress, Kasich is the first state-level Republican to announce actions against Wells Fargo.

"While Wells Fargo only does limited retail banking in Ohio, it does regularly seek state bond business so I have instructed my administration to seek services from other banks instead," Kasich said in a statement. "This company has lost the right to do business with the state of Ohio because its actions have cost it the public's confidence."

Wells Fargo said it will work to regain business with Ohio. "Wells Fargo manages its business with the state of Ohio in business lines that are separated from our retail bank," the company said in a statement.

The ban applies to any financial services contracts that state agencies under the governor's authority may have with Wells Fargo, as well as any future state bond offerings that Ohio may make. Kasich said he will seek to exclude Wells from participating in bond offerings through the Ohio Public Facilities Commission. As governor, Kasich has a vote on commission's six-member board.

Since 2012, Wells Fargo & Co. has participated in roughly $830 million in Ohio state bond offerings, according to data provided by the governor's office. The most recent state bond offering Wells participated in was in March, for $100 million in bonds through the OPFC.

Kasich's ban is effective for a year, but could be extended depending on how Wells repairs its reputation with the public.

Ohio's Sen. Sherrod Brown, the senior Democrat on the Senate Banking Committee and a strong critic of Wells since the scandal broke, said he strongly agreed with Kasich's announcement.

"Wells Fargo cheated customers and until it lays out concrete steps to make things right, it doesn't deserve the state of Ohio's business," Brown said.