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Senator Elizabeth Warren, a Democrat from Massachusetts, interviews Jerome Powell, chairman of the US Federal Reserve nominee for US President Donald Trump, right, during a Senate Banking Committee confirmation hearing in Washington, DC, States United, Tuesday, November 28, 2017.
Andrew Harrer | Bloomberg | Getty Images
Senator Elizabeth Warren on Tuesday urged the Federal Reserve to dismantle Wells Fargo, arguing that a series of scandals at the financial titan were putting consumers at risk.
In a letter to Fed Chairman Jerome Powell, the Massachusetts Democrat called on the central bank’s board of governors to use their authority to separate the Wells Fargo banking unit from its financial services business. She said the Fed could dismantle 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 banking arm from the rest of its financial operations, the Fed can ensure that Wells Fargo faces the appropriate consequences of its ungovernable behavior. for a long time. “
Wells Fargo did not immediately respond to a request for comment.
The company’s shares rose less than 1% on Tuesday morning.
Washington has stepped up its scrutiny of Wells Fargo’s practices since the 2016 revelation that the company has created millions of bank accounts in the name of real people without their knowledge or consent. Wells Fargo has paid more than $ 4 billion in penalties since the scandal was exposed.
The company’s problems did not end there. Last week, the Office of the Comptroller of the Currency fined Wells Fargo $ 250 million, claiming it violated a 2018 consent order, a move that requires financial institutions to tackle breaches of regulatory standards.
Despite this, Wells Fargo said last week that a 2016 Consumer Financial Protection Bureau consent order related to the fake accounts scandal had expired. This could signal an easing of government pressure on the company.
The Fed capped Wells Fargo’s assets in 2018.
Warren cited the scandal of fake accounts and other practices in Wells Fargo’s insurance and wealth management business, saying the company is a “deadly repeat offender” with an “inability to meet regulatory requirements and treat its consumers honestly and fairly “.
– CNBC’s Hugh Son contributed to this report
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