Feds should break up bank

Sen. Elizabeth Warren says Wells Fargo has run out of time to fix the many internal problems that have harmed its customers.

In a letter to Federal Reserve Chair Jerome Powell on Monday, Warren asked the Fed to force the financial giant to break off its core banking activities, like offering checking and savings accounts and loans, from its other financial services.

Divorcing Wall Streetcentric work — which can include managing investment funds and providing financial market sales and trading services — from the bank would ensure that Wells Fargo’s everyday customers did not continue to suffer, Warren wrote. The Fed could accomplish this, she explained, by revoking Wells Fargo’s financial holding company license — essentially making it impossible for the company to operate any nonbanking businesses.

“Continuing to allow this giant bank with a broken culture to conduct business in its current form poses substantial risks to consumers and the financial system,” she wrote.

It is the first time that Warren, D-Mass., has made such a request to a regulator. If the Fed granted it, Wells Fargo would somehow have to shed dozens of non-bank subsidiaries.