Democratic United States Senator Elizabeth Warren of Massachusetts on Tuesday demanded that Federal Reserve Chairman Jerome Powell chop up Wells Fargo, just days after the banking behemoth was slapped with a $250 million fine for “unsafe and unsound practices” that violated a Consumer Financial Protection Bureau consent order.
Warren – a former Harvard University law professor and defender of consumers’ rights who helped establish the CFPB under former President Barack Obama – sent a letter to Powell urging him and the Fed’s Board of Governors to separate Wells Fargo’s banking division from its financial services department, arguing that the institution cannot be trusted to follow the law and not screw over its millions of account holders.
In other words, Wells Fargo’s greed must not go unpunished.
“The Fed should use its longstanding authority under the Bank Holding Company Act to revoke Wells Fargo’s status as a financial holding company (FHC) and require that it separate its bank subsidiary from its other financial activities. Wells Fargo is an irredeemable repeat offender; the Fed must act,” Warren wrote. “Every new report of scandal and ongoing non-compliance by Wells Fargo represents a giant financial institution squeezing consumers to pad profits for its executives. The Fed must revoke Wells Fargo’s FHC status and order the company to develop a plan to ensure that the 65 million customers that currently rely on Wells Fargo’s consumer banking and lending services are protected through the transition. 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. 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. By invoking its full authority to protect consumers and the financial system and requiring Wells Fargo to separate its consumer-facing banking arm from the rest of its financial activities, the Fed can ensure that Wells Fargo faces appropriate consequences for its longstanding ungovernable behavior.”
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Brandon is a political writer for the Hill Reporter specializing in current events, breaking news, and scientific discovery. Brandon holds a Bachelor of Music degree from Indiana University. He lives in New York City.