Sen. Elizabeth Warren urges the Fed to break up Wells Fargo
- Sen. Elizabeth Warren urged the Federal Reserve to break up Wells Fargo, citing risks to consumers.
- In a letter to Fed Chair Jerome Powell, the senator called on the central bank's board of governors to separate Wells Fargo's banking unit from its other businesses.
Sen. Elizabeth Warren on Tuesday urged the Federal Reserve to break up Wells Fargo, arguing a string of scandals at the financial titan puts consumers at risk.
In a letter to Fed Chair Jerome Powell, the Massachusetts Democrat called on the central bank's board of governors to use its authority to separate Wells Fargo's banking unit from its financial services businesses. She said the Fed could break up Wells Fargo by revoking its license to operate as a financial holding company.
"The Fed has the power to put consumers first, and it must use it," Warren wrote. "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."
While Wells Fargo did not directly respond to Warren on Tuesday, it put out a press release highlighting efforts to change its practices and meet regulators' demands. The company said, "we are a different bank today than we were five years ago because we've made significant progress."
The financial giant pointed to moves to split business units into smaller groups, change company leaders, and create teams to better monitor sales practices and risks.
Wells Fargo shares were up slightly on Tuesday.
Washington has increased its scrutiny of Wells Fargo's practices since the 2016 revelation that the company created millions of bank accounts in real people's names without their knowledge or consent. Wells Fargo has paid more than $4 billion in penalties since the scandal came to light.
The company's issues did not end there. Last week, the Office of the Comptroller of the Currency hit Wells Fargo with a $250 million fine, saying it violated a 2018 consent order, a measure that requires financial institutions to address violations of regulatory standards.
Even so, Wells Fargo said last week that a 2016 Consumer Financial Protection Bureau consent order tied to the fake account scandal had expired. That could signal an easing of government pressure on the company.
The Fed put an asset cap on Wells Fargo in 2018.
Warren cited the scandal with fake accounts, and other practices in Wells Fargo's insurance and wealth management businesses, in contending the company is an "irredeemable repeat offender" with an "inability to meet regulatory requirements and treat its consumers honestly and fairly."
— CNBC's Hugh Son contributed to this report