The outgoing Federal Reserve Board chair had some harsh words — and harsh actions — for Wells Fargo & Co. on her way out the door.
Janet L. Yellen’s last day
as chair of of the board of governors at the nation’s central bank was on Friday. On Monday, Jerome H. Powell was sworn in as chairman.
On Yellen’s last day, the Fed issued a cease and desist order
against the San Francisco-based financial institution over multiple scandals that have been revealed over the past two years.
As part of the order, growth at Wells Fargo is being restricted to its size as of year-end 2017 until it
sufficiently improves its governance and controls.
In addition, the bank-holding company is required to replace four board members — including three by April and one more by the end of the year.
Furthermore, Wells Fargo is required to
improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors.
“We cannot tolerate pervasive and persistent misconduct at any bank, and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” Yellen said in a written statement. “The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.”
For its part, the firm’s leaders expressed support and appreciation for the Fed’s actions.
“We take this order seriously and are focused on addressing all of the Federal Reserve’s concerns,” Wells Fargo President and Chief Executive Officer Timothy J. Sloan said in a news release. “It is important to note that the consent order is not related to any new matters, but to prior issues where we have already made significant progress.”
Betsy Sloan, chair of Wells Fargo’s board and a former member of the Fed’s board of governors, added, “Our board is committed to meeting the expectations of our regulators and protecting and serving the interests of our shareholders, customers, team members and the community.”
