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California Suspends Wells Fargo from Bond Work

Nation's largest issuer of municipal bonds will not use Wells Fargo for the next 12 months, as punishment for consumer-banking scandal.

By Romy Varghese, Bloomberg | Updated on September 28, 2016

California, the nation’s largest issuer of municipal bonds, is barring Wells Fargo & Co. from underwriting state debt and handling its banking transactions after the company admitted to opening potentially millions of bogus customer accounts.

The suspension, in effect immediately, will remain in place for 12 months. A “permanent severance” will occur if the bank doesn’t change its practices, State Treasurer John Chiang said Wednesday. The state also won’t add to its investments in Wells Fargo securities. Chiang already replaced Wells Fargo with Loop Capital for two muni deals totaling about $527 million that will be sold next week.

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