Wells Fargo Bank was slapped with sanctions, including limits on its growth and removal of some of its board members by April, the Federal Reserve said Friday.
The regulator said the sanctions on the firm’s growth would continue until the bank “sufficiently improves its governance and controls.” The order does not require Wells Fargo to cease current activities, including accepting customer deposits or making consumer loans, the Federal Reserve said in a release.
The three board members will be replaced by April, and a fourth member of the bank’s board will be named by the end of the year.
“In addition to the growth restriction, the Board’s consent cease and desist order with Wells Fargo requires the firm to improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors,” the Federal Reserve said in a release. “Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017.”
The Federal Reserve said it required each current director to sign the cease and desist order.
“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” said outgoing Federal Reserve Board Chair Janet L. Yellen. “The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.”
Responding to widespread consumer abuses and compliance breakdowns by Wells Fargo, Federal Reserve restricts Wells’ growth until firm improves governance and controls. Concurrent with Fed action, Wells to replace three directors by April, one by year end