Sen. Elizabeth Warren called on the Federal Reserve to break up Wells Fargo, one of the largest banks in the world.
In a Tuesday letter sent to Fed Chairman Jerome Powell, the Massachusetts Democrat urged the Federal Reserve's leadership to use its authority to revoke Wells Fargo's status as a financial holding company and separate its banking subsidiary from its financial services business.
In the six-page letter to Powell, which details several instances of the bank's "misconduct" over the past decade or so, she made the case that Wells Fargo, which is currently led by CEO Charlie Scharf, must be reined in.
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"Continuing to allow this giant bank with a broken culture to conduct business in its current form poses substantial risks to consumers and the financial system," she wrote.
Warren pointed out that in 2016, bank employees surreptitiously created millions of bank and credit card accounts without the knowledge of the customers involved. Wells Fargo fired thousands of employees during the ensuing scandal, which resulted in a $3 billion settlement with the Justice Department.
In 2018, the central bank, then led by now-Treasury Secretary Janet Yellen, took the extraordinary step of imposing an asset cap on the bank.
Warren argued that even after having the asset cap imposed, Wells Fargo has actively worked to expand its investment banking activities. She lashed the bank as "simply ungovernable" for operating the way it has since the cap was imposed.
"I am therefore once again asking the Fed to further limit Wells Fargo's ability to continue harming its consumers and undermining the safety and integrity of our banking system," she wrote.
Warren said that every new scandal and report of noncompliance by Wells Fargo is an example of the bank throwing customers under the bus to increase the profits for 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," she told Powell.
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Wells Fargo's stock appeared unfazed by the memo, with the price actually rising slightly in trading on Tuesday morning. When contacted by the Washington Examiner, the company provided a document created in response to Warren's letter outlining various measures it has undertaken since 2019 to improve oversight and transparency.
"We are a different bank today than we were five years ago because we've made significant progress," the bank said in a statement.
The Federal Reserve declined to comment to the Washington Examiner but did confirm it received the letter.
Original Location: Warren calls on Fed to break up 'ungovernable' Wells Fargo
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