Federal Reserve Shackles Wells Fargo After Fraud Scandal
- 6 years ago
Federal Reserve Shackles Wells Fargo After Fraud Scandal
The central bank blasted Wells Fargo’s board for failing to oversee the bank, and it announced
that the company would replace four members of its 16-person board by the end of the year.
The move, taking place on Janet L. Yellen’s last working day as the central bank’s chairwoman, is all the more extraordinary because it comes at a time when federal banking regulators appointed by President Trump are working vigorously to relax rules
that were imposed in the years following the financial crisis.
The decision by the Fed, one of the San Francisco-based bank’s main regulators, follows revelations over the last two years
that Wells Fargo had deceived its customers by opening dummy accounts in their names and forcing some to take out unnecessary auto insurance.
On a conference call with analysts and investors Friday night, Wells Fargo’s chief executive, Timothy J. Sloan, said the Fed’s actions related to past conduct
that the bank was already taking steps to fix and that they did not affect the bank’s financial condition.
“I don’t remember the last time the board has ever done anything quite as dramatic as that,” said Evan Stewart,
a regulatory lawyer at the law firm Cohen and Gresser, referring to the Federal Reserve Board.
I will cut Regs but make penalties severe when caught cheating!”
Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported,
but will be pursued and, if anything, substantially increased.
The central bank blasted Wells Fargo’s board for failing to oversee the bank, and it announced
that the company would replace four members of its 16-person board by the end of the year.
The move, taking place on Janet L. Yellen’s last working day as the central bank’s chairwoman, is all the more extraordinary because it comes at a time when federal banking regulators appointed by President Trump are working vigorously to relax rules
that were imposed in the years following the financial crisis.
The decision by the Fed, one of the San Francisco-based bank’s main regulators, follows revelations over the last two years
that Wells Fargo had deceived its customers by opening dummy accounts in their names and forcing some to take out unnecessary auto insurance.
On a conference call with analysts and investors Friday night, Wells Fargo’s chief executive, Timothy J. Sloan, said the Fed’s actions related to past conduct
that the bank was already taking steps to fix and that they did not affect the bank’s financial condition.
“I don’t remember the last time the board has ever done anything quite as dramatic as that,” said Evan Stewart,
a regulatory lawyer at the law firm Cohen and Gresser, referring to the Federal Reserve Board.
I will cut Regs but make penalties severe when caught cheating!”
Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported,
but will be pursued and, if anything, substantially increased.