Senator Elizabeth Warren on Tuesday called on the Federal Reserve to break Wells Fargo & Co., saying the bank continues to harm consumers.
In a letter to Fed Chairman Jerome Powell, the Massachusetts Democrat urged the scandal-ridden bank to be forced to separate its traditional banking business from the consumer from its investment business.
Warren said Wells Fargo is working to expand its investment bank, despite the limit of assets imposed on it by regulators, and is carrying out “risky activities” such as hedge fund loans, which may harm your customers.
“Wells Fargo is simply ungovernable,” he wrote, citing a litany of scandals. “Therefore, I once again call on the Fed to further limit Wells Fargo’s ability to continue to harm its consumers and undermine the security and integrity of our banking system.”
““Continuing to allow this giant bank with a broken culture to do business in its current form entails substantial risks for consumers and the financial system.””
Warren also called for a change in Wells Fargo’s leadership and team building to oversee its sales practices and risks.
“The Fed has the power to put consumers first and must use it,” Warren said. “By invoking its full authority to protect consumers and the financial system and requiring Wells Fargo to separate its consumer-oriented banking bank from the rest of its financial activities, the Fed can ensure that Wells Fargo faces the appropriate consequences for its long-standing ungovernable behavior “.
Wells Fargo WFC,
he made no specific comments on Warren’s letter, but issued a statement on Tuesday saying it is committed to serving customers to “the highest standards.”
“Today we are a different bank than we did five years ago because we have made significant progress,” the bank said.
Wells Fargo has been fined more than $ 5 billion in recent years for a series of scandals that harmed customers.
But just last week, Wells Fargo was fined $ 250 million for not correcting old practices it agreed to set under a 2018 regulatory consent order, although Wall Street largely abandoned it. .
“Every day that Wells Fargo continues to maintain these deposit accounts is a day when millions of customers remain at risk of additional negligence and intentional fraud,” he said. “The only way these consumers and their bank accounts can be kept safe is through another institution, that the business model does not depend on the trap of customers for every last penny they can get.”
The prospect of the Fed breaking Wells Fargo is slim, but the bank is likely to face further pressure from the Biden administration, especially if Biden chooses liberal-leaning candidates for the Federal Reserve Board next year coming.
Shares of Wells Fargo rose slightly on Tuesday and have risen 53% so far, compared to the S&P 500 SPX,
18% profit this year.