What You Need to Know
- In a letter to Federal Reserve Chair Jerome Powell, Warren called on the Fed to revoke the bank’s status as a financial holding company.
U.S. Senator Elizabeth Warren urged the Federal Reserve to force Wells Fargo & Co. to separate its traditional banking and Wall Street businesses, after the lender was handed fresh regulatory action and a $250 million fine this month.
In a letter to Federal Reserve Chair Jerome Powell, Warren called on the Fed to revoke Wells Fargo’s status as a financial holding company in order to effect a separation. The Fed should order the company to develop a plan to ensure its customers are protected through the transition, the Massachusetts Democrat said.
“Every single day that Wells Fargo continues to maintain these depository accounts is a day that millions of customers remain at risk of additional negligence and willful fraud,” Warren wrote.
“The only way these consumers and their bank accounts can be kept safe is through another institution—one whose business model is not dependent on swindling customers for every last penny they can get. The Fed has the power to put consumers first, and it must use it,” she said.
The New York Times earlier reported the contents of the letter. A representative for the Fed confirmed it received the letter and said it planned to respond.
Wells Fargo was fined this month over its lack of progress addressing long-standing problems, the first such sanction under Chief Executive Officer Charlie Scharf.
The penalty adds to the more than $5 billion in fines and legal settlements the bank paid over the last five years tied to a series of scandals that began with fake accounts in its branch network.