U.S. Sen. Elizabeth Warren (D-MA) is asking federal regulations to reject Wells Fargo’s petition to lift its asset cap.
Wells Fargo’s recent appeal came days after an enforcement action from the Office of the Comptroller of the Currency (OCC), said Warren. And just two months, a federal judge allowed a class action lawsuit to proceed against the bank for defrauding investors.
“The bank has not made meaningful reforms to correct its history of mismanagement, brazen and egregious consumer abuses, and money laundering violations,” Warren wrote in a letter to Federal Reserve Chair Jerome Powell and Vice Chair Michael Barr. “The Fed should not lift the bank’s asset cap.”
The Fed first imposed the asset cap growth restriction on Wells Fargo in 2018 after there were hundreds of enforcement actions levied by bank regulators for years of mismanagement.
In the letter, Warren details Wells Fargo’s numerous issues in the nearly seven years since the asset cap was instated. This includes, wrote Warren, overcharging customers on mortgages, falsifying documents, charging excessive overdraft fees, and wrongful foreclosure.
“Removing Wells Fargo’s asset cap based on the recommendation of a third-party analysis that Wells Fargo purchased for itself and was provided days after a fellow regulator slapped the bank with a 40-part enforcement action would harm consumers, threaten our financial stability, and reward a bad bank for continuing a long history of abusive and reckless practices,” Warren wrote.
Warren highlighted Powell’s previous commitment that any decision about Wells Fargo’s asset cap would be made by a vote by the Federal Reserve Board of Governors. Powell also noted, said Warren, that Wells Fargo must “make significant progress in remedying its oversight and compliance and operational risk management deficiencies” before the restriction is lifted.
“The most recent OCC action shows that Wells Fargo has not made ‘significant progress’ in remedying its compliance program overhaul,” Warren wrote in the letter. “The Fed must reject Wells Fargo’s appeal and maintain the asset cap until the bank can show that it can properly manage the risks associated with running a large bank.”