Fed Slaps Unusual Penalty On Wells Fargo Following 'Widespread Consumer Abuses'

CEO and President of Wells Fargo & Company Timothy Sloan testifies during a hearing before Senate Banking Housing and Urban Affairs Committee

Trump credited with success, but scandal not far behind

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.

Janet Yellen, chair of the Board of Governors of the Federal Reserve, joins her predecessor, Ben Bernanke, at the Brookings Institution.

Perhaps the wealthiest Fed chair, Mr Powell, who turned 65 yesterday, succeeds Ms Janet Yellen, who ends the first and only term held by a woman.

The Fed educated the bank's board to take part in more nosy oversight of Wells Fargo's senior supervisors and concoct an arrangement to consider them responsible on the off chance that they miss the mark.

Trump was highly critical of Yellen during the 2016 election but praised her after becoming president.

"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. "I've found him to be a very thoughtful policymaker". On both fronts, she can look back with some pride: at just over 4pc, the jobless rate stands at its lowest level since the early 2000s and well below the 10pc peak it reached soon after the financial crisis; meanwhile, inflation has remained at or below the Fed's 2pc.

She cited changes put in place since that time, of which Trump has been critical.

In 2016 it was brought to light that workers at the bank had opened more than 3 million consumer credit card and deposit accounts without the authorization of the customer dating back to 2011.

Yellen was asked if she believed the economy was under threat because stocks had risen too high, creating an asset bubble that could burst, with disastrous results.

"The financial system is much better capitalized".

"I don't want to say too high but I do want to say high", she said, adding that it was "a source of some concern that asset valuations are so high".

In a prepared statement Wells Fargo said that within the next 60 days it would be providing details to the Federal Reserve about its plan of enhancing the governance oversight by the board and the operational risk and compliance management of the company.

The unemployment rate dropped to 4.1 per cent in January this year from 6.7 per cent when she took charge of the central bank in February 2014.

Latest News