The Federal Reserve will hold a public vote when it decides to lift sanctions on Wells Fargo, in a nod to transparency that was requested by Sen. Elizabeth Warren, D-Mass.
Jerome Powell, the central bank’s chairman, agreed to the senator’s request to have the Fed’s Board of Governors vote on ending the sanctions, rather than leaving the decision to Fed staff. Powell informed Warren of the decision in a letter Thursday.
“I’m glad the Fed’s Board of Governors changed course and will vote on whether to lift the growth restriction, rather than delegating that important question,” Warren said in a statement. “The Fed must strictly enforce its order to show Wells Fargo that it means business.”
The Fed imposed unprecedented punishments on Wells Fargo in February for what it called “widespread consumer abuses,” including the megabank’s fake accounts scandal.
Most notably, it ruled that the bank cannot grow in assets until it demonstrates that it has improved its risk management and compliance.
During congressional testimony, Powell indicated to Warren that Fed staff would make the determination as to whether Wells Fargo had made the necessary improvements. Thursday’s change of course means that the Fed’s Board of Governors will have to go on record saying that they think Wells Fargo has improved.
The board consists of three members: Powell, Vice Chairman for Supervision Randal Quarles, and Obama appointee Lael Brainard. Three more Trump nominees are pending in Congress.
Thursday’s letter also indicates that Powell, a former George H.W. Bush Treasury official appointed by Trump, is willing to work with Warren, Congress’ top Wall Street critic.
Although the Fed’s action against Wells Fargo was led by Chairwoman Janet Yellen during her last day at the central bank, Powell voted for it as a member of the board.
