During the press conference on Wednesday, Federal Reserve Chairwoman Janet Yellen answered a question outside of the Federal Open Market Committee meeting news, shedding more light on her recent remarks to Congress.
According to an article by Steve Goldstein in MarketWatch, Yellen expanded on the possibility of Wells Fargo facing a Federal Reserve penalty after its massive account sandal.
From the article
“I’m not able to discuss confidential supervisory information and not yet able to tell you, but we’re committed to taking the actions we regard as necessary and appropriate to make sure the right set of controls are in place in that organization.”
While the news on Wells Fargo massive account scandal first broke back in September of last year, the investigation is still ongoing, with more information slowly coming on what exactly happened at the mega bank.
According to the original news from last year, the Consumer Financial Protection Bureau levied the largest fine in its history — $100 million — against Wells Fargo for the "widespread unlawful" practices of employees who opened more than 2 million fake accounts to get sales bonuses.
Wells Fargo employees secretly opened deposit and credit accounts under existing customers' names without their knowledge, which often racked up fees or other charges, the CFPB announcement stated at the time.
But earlier this month, an internal investigation at Wells Fargo revealed that the bank’s fake account scandal was a much larger issue than anyone thought. As it turns out, the number of potentially fake accounts was actually 3.5 million – 1.4 million more than first thought.
In addition, the impact on Wells Fargo goes far beyond the $100 million fine from the CFPB.
In the wake of the bank’s fine, the bank’s CEO and chairman John Stumpf resigned, the bank revoked the 2016 bonuses for its top executives, clawed back even more money from several top execs, fired four senior managers in February, tossed out another two executives in March, and split the role of chairman and CEO after Stumpf stepped down.
The bank is also nearing a $142 million settlement in a class action lawsuit brought by the customers affected by the fake accounts.
And looking at these latest comments form Yellen, Wells Fargo could expect a penalty from the Federal Reserve soon.
