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Wells Fargo's Rehab Requires Change at the Top

Wells Fargo's Rehab Requires Change at the Top

As perhaps her final act at the central bank, Yellen late Friday hit one of the largest United States banks, Wells Fargo & Co, with an unusual ban on growth that follows the San Francisco-based lender's pattern of consumer abuses and compliance lapses.

The Fed order restricts the bank from growing any larger "until it sufficiently improves its governance and controls", and comes as the company struggles to recover from the two-year-old scandal in which it uncovered millions of phony accounts created without consent of customers.

The Federal Reserve's surprise ban on Wells Fargo & Co growing its balance sheet comes at a hard juncture for the United States' third-largest lender.

Fed officials said the San Francisco-based lender's pattern of consumer abuses and compliance lapses called for an unprecedented sanction.

Controllers can't permit "inescapable and determined wrongdoing at any bank", Yellen said in an announcement.

"I would have liked to serve an additional term and I did make that clear, so I will say I was disappointed not to be reappointed", she said Friday on PBS NewsHour in a rare television interview.

But no one knows yet what the future ramifications will be of the extreme measures the Fed took under her watch and that of her immediate predecessor, . She also sent a letter on Friday to Senator Elizabeth Warren, a Democrat who's among the bank's most prominent critics.

The Fed set a September 30 deadline for the bank to outline reforms and have them reviewed by an outside firm.

A year ago, Wells Fargo burned through $3.9 billion on costs identified with chance administration alone, Sloan said.

"We want to have this cap lifted as soon as possible". Four individuals from the organization's board are to be supplanted before the year's over, extending an update of the board, the Fed said Friday.

The Fed instructed the bank's board to engage in more intrusive oversight of Wells Fargo's senior managers and come up with a plan to hold them accountable if they fall short.

While its banking industry rivals grown, the Fed sanctions will hold Well's Fargo's total consolidated assets to the $2 trillion level measured as of December 31, 2017.

The bank must submit a plan to the Fed within 60 days detailing how it has enhanced oversight from its board of directors and improved compliance and risk management functions, and how it plans to improve further.

Late previous year, the OCC told the bank's board that authorities may take additional enforcement actions over the auto insurance and mortgage improprieties, people familiar with the situation said.

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