The Federal Reserve has imposed unusually harsh penalties on Wells Fargo, punishing it for years of misconduct and barring it from future growth until the bank fixes its problems, the New York Times reported.
The central bank on Friday blasted Wells Fargo’s board for failing to oversee the bank, and it announced that the company would replace four members of its 16-person board by the end of the year.
The move, taking place on Janet Yellen’s last working day as the central bank’s chairwoman, is all the more extraordinary, the Times said, because it comes at a time when federal banking regulators appointed by President Donald Trump are working vigorously to relax rules that were imposed in the years following the financial crisis.
The Fed’s punishment, a forceful intervention by the government into the affairs of a large company, means that one of the country’s largest and most powerful financial institutions will be unable to keep pace with its fast-growing rivals. It follows revelations over the last two years that Wells Fargo had deceived its customers by opening dummy accounts in their names and forcing some to take out unnecessary auto insurance.
Wells Fargo said the sanctions could reduce the embattled bank’s profits by as much as $400 million this year, USA Today reported.