Government

Iowa State Treasurer won't suspend activity with Wells Fargo

'We do the math on every single transaction'

The sign outside the Wells Fargo & Co. bank in downtown Denver April 13, 2016. REUTERS/Rick Wilking
The sign outside the Wells Fargo & Co. bank in downtown Denver April 13, 2016. REUTERS/Rick Wilking
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CEDAR RAPIDS — State Treasurer Michael Fitzgerald thinks the president of Wells Fargo Co. should be fired but doesn’t plan to close the state’s account with the bank that “keeps the state’s checking account, if you will.”

Wells Fargo is under fire from federal regulators and Congress after it was learned its employees opened more than 2 million accounts that may not have been authorized by customers. The company agreed last month to a $185 million civil settlement for restitution and fines and has fired more than 5,000 employees. CEO John Stumpf has agreed to give up $41 million in unvested stock awards, but not to step down.

“I think it’s horrendous that the president of Wells Fargo would not take financial responsibility,” Fitzgerald said Monday. “If he didn’t know, he should have. It’s outrageous. A responsible board of directors should fire him.”

However, Fitzgerald, a nine-term Democrat, isn’t planning suspend dealings with Wells Fargo as his colleagues in California and Illinois have done.

“To react on a whim would be irresponsible,” said Fitzgerald, who was elected 34 years ago and is America’s longest-serving state treasurer. “We signed a contract. It would not be appropriate for us to break the contract.”

The decision is Fitzgerald’s, and Gov. Terry Branstad has no plans to ask him to reconsider, a governor’s spokesman said.

On an average day, Iowa has more than $3 billion in “idle cash” that Fitzgerald and his staff invest overnight, for a few days or for years. “Occasionally, we’ve bought a few securities from them if they had the best deal for our taxpayers,” he said.

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Fitzgerald is confident the state is getting what it is paying for because his office monitors accounts every day.

“We’re not like most citizens who don’t check their back account every single day,” he said. “We do the math on every single transaction, so we know we’re being treated correctly.”

Last year, Iowa paid Wells Fargo about $290,000 in banking fees, Fitzgerald said. Banking services contract are awarded on the basis of competitive bids about every five years. “So just by definition because we picked the lowest bidder, there would be a cost to the state of Iowa if we broke the contract,” he said.

The security of the state’s accounts and Iowans’ private information, such as Social Security numbers, is another concern.

“They’re handling billions of dollars and high-level information,” Fitzgerald said. “We go through a pretty sophisticated look-see to see who has best security.”

Erin Murphy in Des Moines contributed to this report

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