Connect with us

Business

Elizabeth Warren calls on Fed to dismantle Wells Fargo

Published

on

 


Senator Elizabeth Warren said Wells Fargo ran out of time to address the many internal issues that have plagued its customers.

In a letter to Federal Reserve Chairman Jerome H. Powell on Monday, Ms Warren called on the Fed to force the financial giant to cut off core banking activities, such as offering checking, savings and credit accounts. loans, its other financial services. .

Divorcing Wall Street-centric work, which may include managing investment funds and providing sales and trading services in the bank’s financial markets, would ensure that Wells Fargos’ day-to-day clients do not continue to suffer, wrote Ms Warren. The Fed could achieve this, she explained, by revoking the license of Wells Fargos’ financial holding company, essentially preventing the company from operating non-banking activities.

Continuing to allow this giant, culturally broken bank to operate in its current form poses substantial risks to consumers and the financial system, she wrote.

This is the first time that Ms Warren, a Democrat from Massachusetts, has made such a request to a regulator. Mr Powell is unlikely to follow the suggestion, at least for the foreseeable future: Wells Fargo would somehow have to get rid of dozens of non-bank subsidiaries quickly, which would certainly hurt the financial health of the companies. banks.

But Ms Warrens’ demand for such aggressive action hinted at the desire among progressives for a stronger regulatory hand from the Fed. And it comes as President Biden plans to re-elect Mr. Powell at the end of his term early next year.

A Fed spokesperson confirmed that the central bank received the letter.

A Wells Fargo spokeswoman responded to a request for comment by emailing reporters a list of steps the bank had taken since 2019 to change its management structure. The list included replacing senior executives, splitting companies into new groups with separate oversight, creating a protocol for overseeing sales practices, and speeding up the return to customers it has wronged.

Wells Fargo has spent years trying to redress its position with regulators and lawmakers after a cascade of disclosures of wrongdoing the bank made against its customers. He admitted to opening accounts in their names without their knowledge, forcing them to purchase unnecessary insurance and charging them unwarranted mortgage fees.

The bank statement also pointed out that Wells Fargo had fulfilled two improvement requirements that regulators had placed on it. One, from 2015, forced it to improve its monitoring of the fight against money laundering. The other, from 2016, required it to put an end to harmful business practices.

The idea of ​​revoking the bank’s financial holding license was first proposed two years ago by Jeremy Kress, an assistant professor of business law at the Ross School of Business at the University of Michigan. He argued in a academic document that since the Fed requires institutions seeking such a license to have a high regulatory rating of 1 or 2 out of 5 on a scale that federal regulators use to assess whether a bank is well run, any bank that subsequently goes down should lose it.

In her letter, Ms Warren pointed out a report in early 2018, revealing that Wells Fargos’ regulatory rating, normally kept secret, had fallen below the level at which the bank could be considered well managed. She added that it was inconceivable that Wells Fargo could have improved her rating recently given her lingering problems.

Last week, federal regulators announced another round of fines and restrictions on the bank, over its improper management of some of its portfolios of mortgage clients. The Office of the Comptroller of the Currency found that Wells Fargos’ management of its mortgage accounts was so sloppy that it may have improperly foreclosed on the homes of some borrowers. The regulator fined the bank $ 250 million, ordered it to suspend some pending foreclosures and gave it five months to get its management systems back on track.

Ms Warrens’ suggestion would be a much bigger sanction and involve significant challenges, said Jaret Seiberg, analyst for the Cowen Washington Research Group.

The banking system has evolved dramatically since Congress allowed investment banks and commercial banks to come together 25 years ago, Seiberg said. These trades are now nested, and it’s not that simple to say, you have to sell half the bank. Breaking up is difficult.

But immediate revocation of the banking license is not Mr Powell’s only option.

In an interview on Tuesday, Professor Kress said Mr Powell could order Fed officials to issue a new rule setting a limit of two or three years, for example on how long a company could operate with a low management rating and keep your license.

This could set a precedent that this is a tool the Fed can use to hold banks accountable for financial misconduct, Kress said.

The Fed has already taken drastic action in an attempt to force Wells Fargo to improve. Since early 2018, the bank has operated under an asset ceiling, which the Fed has committed to keeping in place until the bank can prove that it has overhauled its risk management procedures and put in place better protections for its customers. But Ms Warren said the bank was distracted from that goal, citing reports that Wells Fargo was trying to expand its business such as arranging business mergers and other investment banking services.

The bank should be forced to drop these Wall Street lawsuits to ensure its executives focus all of their attention on correcting the banks’ many chronic risk management flaws, she wrote.

Wells Fargo is the nation’s fourth-largest bank, although its Wall Street presence, including investment banking and wealth management services, is much smaller than that of competitors like JPMorgan Chase and Bank of America. Its managing director, Charles W. Scharf, has a background on Wall Street and, since its takeover two years ago, has tried to make Wells Fargo more profitable by orienting it more towards Wall Street.

I am concerned that Wells Fargos senior executives are focusing on expanding risky investment banking business instead of addressing consumer damage and improving lax internal controls, Ms Warren said, although her letter to Mr. Powell does not mention Mr. Scharf’s name.

Ms Warren sent a separate letter Monday to the chairman of the board of directors of Wells Fargos. He asked for details on how the board is overseeing bank cleanup efforts and why it pays Mr Scharf so well that he received over $ 20 million in fiscal 2020 even as the problems banking persist.

Sources

1/ https://Google.com/

2/ https://www.nytimes.com/2021/09/14/business/wells-fargo-elizabeth-warren.html

The mention sources can contact us to remove/changing this article

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos

ExBUlletin

to request, modification Contact us at Here or [email protected]