Wednesday, 23 May, 2018

Wells Fargo's Rehab Requires Change at the Top

Rate rises are coming but global economic strength will allow metals to weather the downward pressure on the dollar So long and thanks for all the growth
| 07 February, 2018, 02:05

"We can not tolerate pervasive and persistent misconduct at any bank", outgoing Fed Chair Janet Yellen said in a statement, citing "recent and widespread consumer abuses and other compliance breakdowns".

After markets shut on her last workday in office, Federal Reserve Chair Janet Yellen conveyed a hit to one of the country's biggest banks: Wells Fargo and Co. won't be permitted to develop until the point that it tidies up. The asset limitation will remain in effect until third-party reviews have been completed to the satisfaction of the Federal Reserve.

The bank prioritised growth over ensuring effective risk management and "the enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely", Yellen said in what was perhaps her last official act as Fed chair.

Janet Yellen said she was disappointed that President Donald Trump didn't offer her a second term as Federal Reserve chair, but supports her central bank successor, Jerome Powell, who takes over on Monday.

"The financial system is much better capitalized", Yellen said.

Since then, the bank has also admitted to other questionable practices, including charging car-loan customers for insurance they did not need and charging improper fees to some mortgage borrowers.


Commercial real estate prices are now "quite high relative to rents", Yellen said.

Yellen will join former Fed Chairman Ben Bernanke at the Brookings Institution. The asset cap can be lifted before the rest of the order is satisfied.

Wells Fargo elected six independent directors in 2017, and three other people plan to retire before an annual shareholders meeting, the company said.

Penalties in the amount of $185 million were paid by the bank and the bank in 2017 reached a preliminary settlement of a class-action suit of $142 million. Until Wells Fargo tends to weaknesses in territories including interior oversight, it can't make any move that would help add up to resources past their level toward the finish of 2017, without the Fed's consent. Nine current board members including Chairman Betsy Duke were on the panel before the scandals began erupting.

The Fed specifically cited the need to strengthen oversight by the bank's board of directors, and sent letters outlining the failures to Stumpf and another former director.

Indeed, even after changes the bank made in the previous 17 months, Fed authorities "accept there is more work to be done, and we concur", Chief Executive Officer Timothy Sloan told experts on a phone call Friday night.

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