Senator Elizabeth Warren (Democratic Party) sent a letter to the Federal Reserve Board on Monday urging the central bank to use regulators to revoke Wells Fargo’s position as a financial holding company, with insufficient oversight and effectiveness. It has blown up bank leaders for no governance and is putting pressure on financial giants who have been plagued by a series of fraud-related scrutiny for over a decade.
First reported in the letter New York TimesWarren said the federal government would separate Wells Fargo’s banking subsidiary from other financial activities, including investment banking and trading services, after “many” exposures to continued fraud in banks over the past three years. He said the Bank Holding Company Act should be invoked for this purpose.
“Allowing this huge, culture-broken bank to do business in its current form poses significant risks to consumers and the financial system,” Warren wrote. It violates regulatory orders from 2018 to correct “unsafe or unhealthy” practices in the home lending sector.
Warren also quoted a long list of enforcement orders over the last two decades. This is their knowledge for bankers to achieve “impossible sales goals”.
Wells Fargo’s share rose 2% on Tuesday, but is still about 13% lower than its pre-pandemic level.
“I have told the Federal Reserve Board of Wells Fargo and Company’s repetitive, ongoing, and forgiving efforts to eliminate the abusive and illegal practices that have caused hundreds of millions of dollars in damage to consumers. I write to encourage immediate action in response to hard-to-find mistakes, “Walren wrote. Many allegations of Wells Fargo’s misconduct have been raised in the three years since former Federal Reserve Chairman Janet Yellen put banks under asset limits to curb “widespread” consumer abuse on Monday. He added that the exposure had surfaced. The Fed must act. “
Wells Fargo has been one of the most watched by the federal government since allegations of fraud after the 2008 financial crisis. Last year, Wells Fargo’s former CEO and chairman, John G. Stumpf, signed and certified regulators, including a statement that investors “should have known to be misleading” for nearly a decade. Agreed to pay $ 2.5 million. As part of a record $ 3 billion settlement with the Ministry of Justice, it has agreed to pay the SEC $ 500 million to misleading investors.
The pandemic has put the banking industry on the alert and hit Wells Fargo, the third largest bank in the United States by asset size. Stocks fell 60%, the second worst performing S & P 500 last year. Wells Fargo was one of the first banks to resume headcount reductions at the end of last year, although many banks initially said they would suspend furloughs during a pandemic, after which the company has more than 250,000 employees. It is reported that it may be aiming for a 25% reduction in staff.
Elizabeth Warren asks the Federal Reserve Board to dissolve Wells Fargo (NYTimes)
The SEC charges Wells Fargo executives, including the former CEO, for misleading investors about the bank’s performance (Forbes)
Report: Wells Fargo fires 700 people and banks witness mass dismissals, targeting $ 10 billion savings (Forbes)