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Wells Fargo’s effort to turn the page on consumer fraud scandals is falling short.
That’s according to Massachusetts senator Elizabeth Warren, who has requested the Federal Reserve remove the bank’s board members who served between May 2011 and July 2015 in response to a series of vast consumer fraud scandals.
The bank, already in hot water for creating millions of unauthorized accounts, recently admitted to also selling auto insurance without customers’ knowledge.
Wells Fargo’s response? It has promoted an ex-Fed board governor, Elizabeth Duke, to chairwoman of the board.
Duke, a champion of community banks while at the Fed, became a Wells Fargo director in 2015 and was named vice chair last year after the first round of scandals broke and led to the resignation of then-CEO John Stumpf.
Business Insider contacted Senator Warren to get her reaction.
“Letting a few board members retire early and shuffling around current board members simply doesn’t cut it,” Warren said in an email.
“The Fed should remove all remaining board members who served during the fake-accounts scandal.”
Warren also renewed her call for board members’ removal with a new letter to Fed chairman Janet Yellen dated August 16, and voicing her dissatisfaction at what she sees as central bank inaction.
“Instead of taking steps to remove the responsible Wells Fargo Board members, the Federal Reserve has actually sought to reduce their obligations and the obligations of other directors at the country’s biggest banks,” the letter said.
In July, Warren repeatedly pressed Fed Chair Janet Yellen on the issue during recent Congressional testimony but Yellen would only say the central bank had the power to remove the directors – not that it had any inclination to do so.
A revolving door between Wall Street and Washington has become a major source of public distrust of major US institutions, and it happens to be especially egregious at the Fed.
The scandals have taken their toll on Wells Fargo shares, which have been sinking despite a broader market rally since late June.
- Markets Insider