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Federal Reserve to punish Wells Fargo for fake account scandal

Federal Reserve to punish Wells Fargo for fake account scandal
Posted at 5:08 PM, Feb 02, 2018
and last updated 2018-02-02 19:08:16-05

The Federal Reserve is punishing Wells Fargo.

The Fed said late Friday that it will restrict the bank's growth in light of "widespread consumer abuses," including its notorious fake-accounts scandal.

Wells Fargo won't be allowed to get any bigger than it was at the end of last year until the Fed is satisfied that it has cleaned up its act.

"We cannot tolerate pervasive and persistent misconduct at any bank," outgoing Fed Chairwoman Janet Yellen said in a statement. Friday is her last day on the job.

Wells Fargo will replace three board members by April and a fourth by the end of the year. In addition, the bank must improve its risk management.

The bank agreed to the Fed's conditions under what's known as a consent decree.

Related: Elizabeth Warren wants the Wells Fargo board wiped out

In a statement, Wells Fargo said it is "confident" it can meet the Fed's requirements.

Wells Fargo has admitted that its workers responded to wildly unrealistic sales goals by creating 3.5 million potentially fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance.

--CNNMoney's Matt Egan contributed to this report.

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