Federal Reserve Chair Jerome Powell said during a press conference Wednesday that Wells Fargo’s asset cap will remain in place until the bank has “comprehensively” fixed its governance and compliance deficiencies.
In February 2018, the Federal Reserve imposed the cap on Wells Fargo, restricting the scandal-plagued bank from growing larger than its 2017 total asset size ($1.95 trillion). The restriction was placed because of the bank’s systemic failures to stop a host of consumer abuses and compliance breakdowns in its banking, lending, and auto insurance divisions—which included opening millions of fake accounts in customers’ names and overcharging customers in its mortgage and auto loan businesses.
Powell made the comment days after Sen. Elizabeth Warren (D-Mass.) urged the Fed to break up Wells Fargo, arguing “every new report of scandal and ongoing noncompliance” proves the bank is “ungovernable.” A $250 million fine levied against Wells Fargo by the Office of the Comptroller of the Currency earlier this month for continued risk management failures served as the catalyst for Warren’s plea.
“We are very closely monitoring Wells Fargo’s efforts to fix its widespread and pervasive problems,” Powell said Wednesday. “They represent a serious matter to us, and the firm is required to remediate them. We will take appropriate supervisory action if the firm fails to meet our expectation.”
Powell continued, “We continue to hold the firm accountable for its deficiencies with an unprecedent asset cap that will stay in place until the firm has comprehensively fixed its problems. We are not going to remove that asset cap until that’s done.”