Elizabeth Warren urges Federal Reserve to dissolve Wells Fargo

Elizabeth Warren urges Federal Reserve to dissolve Wells Fargo

Senator Elizabeth Warren, a Democrat from Massachusetts, interviews President Jerome Powell, the U.S. Federal Reserve candidate for U.S. President Donald Trump, during a Senate Banking Committee confirmation hearing Tuesday, November 28, 2017 in Washington, DC, DC, United States. .

Andrew Harrer | Bloomberg | Getty Images

Senator Elizabeth Warren on Tuesday urged the Federal Reserve to dissolve Wells Fargo, arguing that a spate of financial titan scandals put consumers at risk.

In a letter to Fed Chairman Jerome Powell, the Massachusetts Democrat called on the central bank’s board of governors to use their authority to separate the Wells Fargo banking unit from its financial services business. She said the Fed could dismantle Wells Fargo by revoking its license to operate as a financial holding company.

“The Fed has the power to put consumers first, and it should be using it,” Warren wrote. “By applying its full authority to protect consumers and the financial system, and by requiring Wells Fargo to separate its consumer banking arm from the rest of its financial operations, the Fed can ensure that Wells Fargo faces the appropriate consequences of your outdated behavior.” since a long time. . “

Wells Fargo did not immediately respond to a request for comment.

On Tuesday morning, the company’s shares were trading with a gain of around 2%.

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Washington has stepped up its investigation into the practices of Wells Fargo since the 2016 revelation that the company has created millions of bank accounts in the name of real people without their knowledge or consent. Wells Fargo has paid more than $ 4 billion in fines since the scandal began.

The company’s problems did not end there. Last week, the Office of the Comptroller of the Currency fined Wells Fargo $ 250 million, claiming it violated a 2018 consent order, a move that requires financial institutions to tackle breaches of regulatory standards.

Yet Wells Fargo said last week that a 2016 Consumer Financial Protection Bureau consent order related to the fake account scam had expired. This may indicate that government pressure on the company is easing.

The Fed imposed an asset cap on Wells Fargo in 2018.

Warren cited the scandal of fake accounts and other practices in Wells Fargo’s insurance and wealth management business, saying the company is an “incredible repeat offender” because of its “failure to meet regulatory requirements and treats consumers honestly and fairly “.

– CNBC’s Hugh Son contributed to this report

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