WASHINGTON–Wells Fargo will remain under the asset cap imposed on it by the Federal Reserve until it demonstrates it has taken actions to correct an environment that has led to “significant consumer abuses,” according to the Fed’s chairman.
Following the FOMC’s meeting earlier this week, Federal Reserve Board Chairman Jay Powell said the asset cap, which is rarely imposed by the Fed, came after what he called “remarkably widespread series of breakdowns” that occurred in the bank’s risk-management apparatus, resulting in “significant consumer abuses.”
As CUToday.info has reported, Wells Fargo has committed a series of illegal acts, including the opening of more than three-million bogus customer accounts as employees attempted to meet aggressive sales targets. That led to the firing of more than 5,000 of its workers. Other illegal activities and non-compliant practices have led to more than $1 billion in fines for the bank.
The asset cap was put in place in February of 2018 as was a requirement Wells Fargo remove some of its directors.
In February 2018, the Fed imposed a limit on the bank’s growth, as well as removal of some of its directors.
‘Cannot Tolerate Persistent Misconduct’
“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” then Chair Janet L. Yellen said at the time the cap was put in place.
The Fed said the cap would remain until Wells Fargo “sufficiently improves its governance and controls.”
Powell gave no indication that the Fed is preparing to remove the cap, which he called an “unprecedented sanction.”
“We will not lift that until Wells Fargo gets its arms around this, comes forward with plans, implements those plans and we’re satisfied with what they’ve done. That’s not where we are right now.”