Elizabeth Warren calls on the Federal Reserve to liquidate Wells Fargo
Senator Elizabeth Warren, a Massachusetts Democrat, questions Jerome Powell, chairman of the Federal Reserve candidate for President Donald Trump, right, during a Senate Banking Committee hearing in Washington, DC, the United States, on Tuesday, Nov. 28 2017.
Andrew Harrer | Bloomberg | Getty Images
Senator Elizabeth Warren on Tuesday called on the Federal Reserve to liquidate Wells Fargo, arguing that a number of scandals involving the financial giant are putting consumers at risk.
In a letter to Fed Chairman Jerome Powell, the Massachusetts Democrat urged the Central Bank’s Board of Governors to use its powers to separate the Wells Fargo banking entity from its financial services operations. She said the Fed could liquidate Wells Fargo by revoking its license to operate as a financial holding company.
“The Fed has the power to put consumers first, and it must use it,” Warren wrote. “By using its full authority to protect consumers and the financial system, and by asking Wells Fargo to separate its consumer-facing banking arm from the rest of its financial operations, the Fed can ensure that Wells Fargo has appropriate consequences for its longstanding uncontrollable behavior.”
Although Wells Fargo did not respond directly to Warren on Tuesday, it released a press release highlighting efforts to change its practices and meet regulatory requirements. The company said: “We are a different bank today than we were five years ago because we have made significant progress.”
The financial giant pointed to steps to divide businesses into smaller groups, change management, and create teams to better monitor sales practices and risks.
Wells Fargo stocks rose slightly on Tuesday.
Read more about CNBC’s political coverage:
Washington has stepped up Wells Fargo’s practices since the 2016 revelation that the company had created millions of bank accounts in real people’s names without their knowledge or consent. Wells Fargo has fined more than $ 4 billion since the scandal became known.
The company’s problems did not end there. Last week, the Office of the Comptroller of the Currency Wells Fargo fined $ 250 million for violating a 2018 consent order, a measure that obliges financial institutions to address violations of regulatory standards.
Even so, Wells Fargo said last week that a 2016 consent order from the Consumer Financial Protection Bureau related to the fake account scandal had expired. That could signal that government pressure on the company is easing.
The Fed set a wealth limit for Wells Fargo in 2018.
Warren cited the scandal involving forged accounts and other practices in Wells Fargo’s insurance and wealth management businesses, claiming the company was an “irredeemable repeat offender” with an “inability to comply with regulatory requirements and to treat its consumers honestly and fairly”.
– CNBC’s Hugh Son contributed to this report
Subscribe to CNBC on YouTube.