Sen. Elizabeth Warren D-Mass., is upping the pressure on Wells Fargo to fire its CEO Tim Sloan.
The influential liberal senator wants Federal Reserve Chairman Jerome Powell to maintain an unusual regulatory cap on the bank’s size unless its board replaces Sloan.
“I write to urge you not to remove the growth cap the Federal Reserve has imposed on Wells Fargo until the company’s Board of Directors replaces CEO Tim Sloan with someone who is not deeply implicated in the bank’s repeated and egregious misconduct,” Warren’s letter to Powell, sent Thursday, reads. “Given Mr. Sloan’s track record, the Board of Directors cannot comply with the Federal Reserve’s requirements for removing the growth cap if it permits Mr. Sloan to continue running the company.”
Warren argues that since Sloan served in senior capacities during Wells Fargo’s fake accounts scandal, he should be held responsible.
“There are only two possibilities: either he was aware of this misconduct and did nothing to stop it, or he was not aware of it despite his obligations as a senior manager of the company,” Warren wrote in Thursday’s letter. “Either way, the Wells Fargo Board of Directors cannot plausibly claim that it is ‘ensur[ing] senior management’s ongoing effectiveness in managing the Firm’s activities,’ while retaining a C.E.O that helped oversee this much misconduct.”
The asset cap on Wells Fargo is part of an enforcement action the Fed took against the bank on Feb. 2, Janet Yellen’s last day as chairwoman. That punishment came in response to Wells Fargo employees opening 3.5 million bank and credit card accounts for customers without their knowledge, a scandal that led to the departure of the bank’s previous chief executive, John Stumpf. At the same time, Wells Fargo moved to replace four directors on its board. The bank cannot grow until the Fed’s Board of Governors decides that it has improved its corporate governance to prevent similar practices from occurring again.
Though it must maintain total assets at levels below those it held at the end of 2017, Wells Fargo remains the third-largest U.S. bank at $1.872 trillion in total assets.
Wells has also agreed to pay nearly $150 million to customers affected by the fake accounts in a combination of a class action lawsuit settlement and voluntary reimbursement.
