US Senator Elizabeth Warren asked the Federal Reserve to force Wells Fargo & Co. to separate its traditional banking and Wall Street businesses, as the lender was handed fresh regulatory action and a $250 million fine this month.
In a letter to Federal Reserve Chairman Jerome Powell, Warren called on the Fed to rescind Wells Fargo’s status as a financial holding company in order to effect a separation. The Massachusetts Democrat said the Fed should order the company to develop a plan to keep its customers safe through the transition.
“Every single day that Wells Fargo continues to maintain these depository accounts is a day when millions of customers are at risk of additional negligence and willful fraud,” Warren wrote. “The only way to keep these consumers and their bank accounts safe is through another institution—whose business model doesn’t rely on duping customers for every last penny. The Fed has the power to put consumers first, and it has to use it.” needed.”
The New York Times previously reported the contents of the letter. A representative for the Fed confirmed that it had received the letter and said it planned to respond. Wells Fargo did not immediately comment.
Wells Fargo was fined this month for a lack of progress in addressing long-standing problems, the first such sanction under chief executive Charlie Scharf. The bank added more than $5 billion in fines and legal settlements over the past five years tied to a series of scams that began with fake accounts in its branch network.
The latest order from the Office of the Comptroller of the Currency, citing shortcomings in Wells Fargo’s home loan loss mitigation practices — steps firms have taken to avoid foreclosures — has forced the bank to “fully and timely remediate.” prevented from being able to. Harm customers.”
Warren cited the Bank Holding Companies Act, which requires that banks be well capitalized and well managed. If a financial holding company falls short of these, the Fed must give notice to the institution to correct its deficiencies. Should the bank fail to resolve them within 180 days, the Fed may ask the company to divest control of any subsidiary depository institution — or the bank may choose to stop engaging in activity that the bank may choose to do with the holding company. is not allowed.
“This new phenomenon raises new questions about whether the company can meet the needs of its customers,” Warren said.
Don’t miss a story! Stay connected and informed with Mint.
download
Our App Now!!
.