After Push from Senator Warren, Federal Reserve Will Require Public Board Vote on Lifting Wells Fargo Growth Restrictions
Latest Action in Response to Warren Calls for Holding Wells Fargo Accountable
Washington, DC - Federal Reserve Board Chair Jerome Powell sent a letter to Senator Elizabeth Warren (D-Mass.) agreeing to her demand for a public vote by the Federal Reserve Board of Governors on Wells Fargo remediation plans. Chair Powell also assented to Senator Warren's request to consider releasing as much of the third-party review on how the bank is implementing reforms as possible. The February 2nd consent order between the Fed and Wells Fargo prohibits the bank from growing any larger until it makes certain improvements. Under the order's terms, Wells Fargo must submit a plan to make its board of directors more effective and a plan to improve its risk management policies to the Board.
During a March 1st Senate Banking Committee hearing, Chair Powell said he intended to delegate the Board's decision to accept the bank's remediation plans to staff. Senator Warren pressed Chair Powell to "consider requiring a vote of the Fed before" approving a plan and Chair Powell said he would. In April, Senator Warren followed up with a letter to Chair Powell calling on him to commit to a public vote on Wells Fargo's remediation plans and urged him to look into releasing the third-party review required by the consent order. On May 10th, Chair Powell wrote a letter back in response to Senator Warren accepting her requests.
"After further consideration, the decision about terminating the asset growth restriction will be made by a vote of the Board of Governors," wrote Chair Powell. He continued that when the third-party review of Wells Fargo's remedial actions is ready, "we will review that report to determine whether and to what extent the report can be publicly disclosed without impairing protected interests."
"I'm glad the Fed's Board of Governors changed course and will ?vote on whether to lift the growth restriction, rather than delegating that important question. The Fed must strictly enforce its order to show Wells Fargo that it means business," said Senator Warren.
Senator Warren has been pushing for real accountability for Wells Fargo for months:
On September 20, 2016, Senator Warren called on former Wells Fargo CEO and Chairman John Stumpf to resign for his role in the scandal.
- Mr. Stumpf resigned on October 12, 2016.
On June 19, 2017, Senator Warren sent a letter to then-Fed Chair Janet Yellen urging her to remove 12 Wells Fargo board members following the fake accounts scandal. At a Senate Banking Hearing Committee in July 2017, Senator Warren again called on Chair Yellen to remove Wells Fargo board members. Later in July 2017, Senator Warren renewed her call for the Fed to remove Wells Fargo board members after it was reported that more than 800,000 Wells Fargo customers were charged for auto insurance they did not need. In August 2017, Senator Warren again urged for the removal of Wells Fargo board members amid new evidence that the bank failed to refund money owed to car loan customers, that it overcharged small businesses for credit card transactions, and that it billed certain mortgage customers for unexpected optional services.
- On February 2, 2018 Chair Yellen announced in response to Senator Warren that the Fed would freeze the growth of Wells Fargo and push out four of its board members.
During a March 1st Senate Banking Committee hearing, Senator Warren urged Fed Chair Jerome Powell to hold a public vote by the Federal Reserve Board on lifting growth restrictions for Wells Fargo instead of delegating it to staff and asked for the public release of the third-party review of how Wells Fargo is implementing reforms. Senator Warren followed up in April and pressed Chair Powell to change course.
- In a response to Senator Warren on May 10th, Chair Powell reconsidered and announced he will require a Fed Board vote on lifting Wells Fargo's growth restrictions. He also said he would consider releasing as much of the third-party review as possible.
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