Senator urges Fed to boot Wells Fargo board members
Sen. Elizabeth Warren is calling on the Federal Reserve to remove Wells Fargo & Co. board members who presided over the bank when it opened millions of consumer accounts without customers’ authorization.
The scandal, which erupted last year, “revealed severe problems with the bank’s risk management practices — problems that justify the Federal Reserve’s removal of all responsible board members,” the Massachusetts Democrat wrote in a Monday letter to Federal Reserve Chair Janet Yellen.
The letter primarily cites a report by New York law firm Sherman & Sterling, which was hired by the board to conduct an independent investigation into the scandal.
The report, released in April, found that the board did not take an active enough role in monitoring the bank’s practices, which in turn allowed problems to persist for years. Some critics said the report did not hold the board accountable enough, painting board members as out of the loop rather than negligent.
Federal banking regulators have the authority to remove bank directors, although it’s something of a last resort.
Warren’s letter requests the removal of 12 current board members, because they served between May 2011 and July 2015 — the period during which the board admitted opening as many as 2.1 million sham accounts in a $185 million settlement with regulators and the Los Angeles city attorney’s office.
Excluded from the call for removal are CEO Timothy Sloan and directors Karen Peetz and Ronald Sargent, all of whom joined the board later.
Wells Fargo defended the board’s response to the scandal.
“Wells Fargo’s board and management team have taken many actions in response to its retail sales practices issues,” a bank statement said.