It will take more than the retirement of Wells Fargo CEO John Stumpf to make California State Treasurer John Chiang change his mind about doing business with the bank again.
In September, the state suspended its relationship with Wells Fargo after the bank was accused of defrauding customers.
Stumpf retired effective immediately on Wednesday. President and Chief Operating Officer Tim Sloan was chosen to succeed him as CEO and Lead Director Stephen Sanger will serve as the board’s non-executive chairman.
Chiang told CNBC’s “Closing Bell” on Thursday he is going to watch the bank closely to make sure there is a change in culture and it returns to serving customers.
“If we’re going to have more of the same, that’s not acceptable,” he said. “We are beyond the point of tweaking. We want to see fundamental reform of Wells Fargo before we make a decision.”
The bank came under fire after it was revealed that employees in its community banking division opened about 2 million accounts without customer authorization. Wells Fargo ultimately paid $185 million in fines, and Stumpf found himself in the crosshairs on Capitol Hill.
California’s sanctions include suspending Wells Fargo as a managing underwriter on state negotiated bond sales. Chiang said the financial hit for the bank will probably be in the millions.
Plus, California is the nation’s largest issuer of municipal debt.
“There is huge prestige when you say you can do business with the largest municipal issuer. We want them to get back on the right track. We’re not trying to create harm for them. We want them to fix the problems,” he said.
New York City is still doing business with Wells Fargo, for now. The city’s municipal pension funds include over 10,000 shares of the bank.
Comptroller Scott Stringer, whose office advises on those municipal pension funds, welcomed the news that Stumpf has left the company.
However, he told “Closing Bell” he wants more accountability at the firm for what happened, noting that no managers have been fired. He has also called for clawbacks, or recouping executive compensation, at the bank.
“We need to see results. We need to see transparency. And we need to send a very strong message that we’re watching and yes, if you do not do what we expect you to do … we could pull out as well.”