FOR IMMEDIATE RELEASE
March 31, 2020
Contact: Pamela Russell at prussell@bettermarkets.com
Washington, D.C. – Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement regarding Wells Fargo’s reported request that the Federal Reserve lift the asset cap it imposed due to the bank’s decade of customer exploitation and extensive controls failures:
“The Federal Reserve should not remove the asset cap imposed on Wells Fargo until the bank has corrected all of its many widespread, egregious failures, including of its compliance, legal, risk management and other controls, as well as the complete breakdown of corporate governance, that resulted in more than a decade of abusing and exploiting millions of customers. As was made clear from the recent House Financial Services Committee Wells Fargo Report and the recent OCC action against Wells Fargo’s former officers, the asset growth cap was based on overwhelming evidence and was fully merited.
“However, Wells Fargo’s stated desire to support more businesses and customers suffering from the coronavirus crisis should be supported. This is particularly true now that Wells Fargo has a new Chairman of the Board, new CEO and several new members of senior management, who appear sincerely focused on fixing what’s wrong at the bank.
“Given that, the Federal Reserve should consider temporarily suspending the asset cap for the limited purpose of enabling Wells Fargo to help businesses and customers suffering from the coronavirus crisis, particularly but not exclusively as it relates to CARES Act programs and activities. For example, as one of the nation’s largest lenders to small businesses, Wells Fargo could and should be a leader in providing expertise and capacity for the rapid implementation of the Paycheck Protection Program (PPP) in the CARES Act. The Federal Reserve should also require Wells Fargo to ringfence via separate tracking, to the extent practicable, any specific coronavirus-related asset growth and the Fed should also automatically sunset the growth cap suspension upon expiration of the emergency and enable an appropriate transition back to the cap.
“Regardless of any temporary relief granted, the asset cap should only be fully removed by the Federal Reserve after Wells Fargo demonstrates conclusively that it has satisfied all of the supervisory concerns and conditions that gave rise to the imposition of the cap in the first place. By prior commitment, the Federal Reserve can only take such action at a duly noticed open meeting and upon a public vote based on ample evidence. To the extent Wells Fargo surges expertise and capacity to help – and in fact does help – the country, businesses and individuals in responding to the coronavirus crisis by, for example, rapid deployment of the PPP or related programs, then it might provide evidence that the bank has indeed addressed at least some of the prior deficiencies. Put differently, Wells Fargo’s actions during the cap suspension could be a real-time stress-test of their claimed management, systems and control improvements, that the Federal Reserve may want to consider in connection with its subsequent evaluation of fully removing the cap.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
