Fed asked to oust Wells directors
Sen. Elizabeth Warren renewed her attack on Wells Fargo & Co., urging the Federal Reserve to remove the 12 directors who were on the board when bank employees set up legions of fake customer accounts.
Congress empowered the Fed to remove board members if they violate the law or engage in unsafe business practices that cause banks with federal deposit insurance to suffer losses, Warren, D-Mass., wrote in a letter Monday to Fed Chairwoman Janet Yellen.
“I urge you to exercise your legal authority to remove the holdover Wells Fargo board members,” Warren wrote. “The board did nothing to stop rampant misconduct” that led to “more than 5,000 bank employees creating more than 2 million fake accounts” between 2011 and 2015, Warren added.
Eric Kollig, a Fed spokesman, said, “We have received the letter and plan to respond.”
Wells Fargo has faced a barrage of criticism from Warren and others since it was fined $185 million by regulators in September for opening retail bank accounts without customer approval. The scandal triggered public complaints and congressional hearings, prompting the San Francisco bank to name new leaders, claw back pay and find new ways to encourage sales. In April, shareholders voted narrowly to re-elect all 15 board members after some proxy advisers and large investors had urged that the majority be voted off.
Wells Fargo has “taken many actions in response to its retail sales practices issues, including changes in senior leadership, executive accountability actions and numerous steps to ensure we make things right with any customer affected,” spokeswoman Jennifer Dunn said in an email. “That work continues and remains a core part of our efforts.”
Warren’s real goal probably isn’t to oust the firm’s board, but to use the Wells Fargo scandal as a means of rebutting Republican calls for broad bank deregulation, said Isaac Boltansky, an analyst at Compass Point Research & Trading.
’’It’s about defending the regulatory regime,” Boltansky said in a phone interview. “Senator Warren’s big fear is that the call for medium-size and smaller bank deregulation will be used as a Trojan horse” for easing rules against the biggest lenders.