On the heels of its raucous, finger-pointing annual meeting, Sen. Elizabeth Warren (D-Mass.) is demanding that the Federal Reserve fire board members of the embattled Wells Fargo bank.

In June 19 letter to Fed Chair Janet Yellen, she called upon the Federal Reserve to deploy its ability to fire the directors for a lack of oversight and risk management as employees at the national bank opened millions of fraudulent customer accounts in their pursuit of sales targets.

“Federal Reserve regulations and guidance impose clear risk-management obligations on the Board, obligations that are quite demanding for a bank as large and complex as Wells Fargo,” Warren wrote.

In her letter, Warren repeatedly referenced an internal report commissioned by the bank.

Released on April 10, the Board of Directors of Wells Fargo & Company authorized an independent investigation into the Company’s retail banking sales practices. Led by a special committee of Independent Directors, the investigation was launched in September 2016 and assisted by the law firm Shearman & Sterling.

Shearman & Sterling conducted 100 interviews of current and former managers, employees, members of Wells Fargo’s Board of Directors and other relevant parties and searched more than 35 million documents.

The firm also reviewed information concerning more than 1,000 investigations of lower-level employees terminated for sales integrity violations, which Wells Fargo’s Internal Investigations group conducted.

Warren argued that the “exhaustive investigation” into the Board's conduct establishes that it “failed to satisfy its risk-management obligations.”

“The 2008 financial crisis demonstrated the danger of inadequate risk-management practices at the country's largest banks,” she wrote. “The Federal Reserve must hold the Wells Fargo Board members accountable for their risk-management failures—both to ensure the safety and soundness of one of the country's biggest banks and to show the rest of the banking industry that poor risk-management practices will not be tolerated.”

The scandal also revealed “severe problems with the bank's risk management practices—problems that justify the Federal Reserve's removal of all responsible Board members,” she added.

Congress has empowered the Federal Reserve to remove board members if they "violated any law or regulation" or "engaged or participated in any unsafe or unsound practice" that caused an insured depository institution to "suffer financial loss" and that demonstrated "continuing disregard for the safety or soundness" of that institution.

Using those powers is warranted because “the Board failed to create an adequate risk management framework that would have alerted it to systemic problems with retail sales practices,” Warren wrote. “This failure violated Federal Reserve regulations on risk management at large banks and represented an unsafe and unsound practice.”

“The Shearman & Sterling report details the Board's refusal to seriously address improper sales practices despite years of red flags,” she added. “By any measure, a bank's risk management practices cannot be adequate if they permitted more than 5000 employees to open more than two million sham accounts in a four-year span.”

The letter points out that “the Board's improper conduct” caused Wells Fargo to suffer massive financial losses, including nearly $200 million in settlements with government entities and exposure to substantial additional losses in private litigation. It also caused long-lasting reputational damage to the bank that has eroded the bank's customer base.

“While other federal regulators with jurisdiction over this scandal (the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency) have taken steps to hold Wells Fargo accountable and promote the integrity of the banking system, the Federal Reserve has done nothing to date, despite its ample statutory authority,” Warren chided the agency.

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