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To be honest, Wells Fargo probably didn’t think much of its latest regulatory run-in, a $250 million fine for failing to stop doing the mortgage things—overcharging customers, improperly kicking them out of their homes, etc.—it had been told three years earlier to stop doing. I mean, anything less than 10 figures isn’t going to make Charlie Scharf sweat, and the CEO more or less shrugged the whole thing off, simply saying, “progress will come alongside setbacks.”

Well, there’s one setback that progress will not come alongside, and one potentially very important collateral consequence of Wells’ most recent failure: It reminded Sen. Elizabeth Warren once again that Wells continues to exist, and, quite frankly, she doesn’t think it should.

In a letter to the Federal Reserve chair, Jerome H. Powell, on Monday, Ms. Warren asked the Fed to force the financial giant to break off its core banking activities, like offering checking and savings accounts and loans, from its other financial services…. The Fed could accomplish this, she explained, by revoking Wells Fargo’s financial holding company license — essentially making it impossible for the company to operate any nonbanking businesses.

“Continuing to allow this giant bank with a broken culture to conduct business in its current form poses substantial risks to consumers and the financial system,” she wrote.

Of course, Warren can’t be under any illusion that Powell will actually do any of that, but Wells’ unfortunate-as-ever timing gives her the opportunity to shout down the growing chorus calling for his reappointment as Fed chair, by demonstrating why he shouldn’t be.

Left-leaning activists and lawmakers are pushing President Joe Biden to dump Federal Reserve Chair Jerome Powell for Fed Governor Lael Brainard with a last-ditch message: Don’t miss a rare opportunity to install a known and tested Democrat atop the world’s most important economic institution…. Over the past four years, she built credibility with the progressive wing of the Democratic Party by dissenting more than 20 times on moves by Trump’s appointees, including on rollbacks of regulations placed on big banks after the 2008 financial crisis….

“The whole point of a four-year term is so that the political process and the public’s elected officials get to decide who is going to run the most important financial and economic policymaking body in the country,” [Better Markets head and Warren supporter Dennis Kelleher] said. “I find it hard to believe that in a country of 320 million people there isn’t one Democrat who is more or better qualified for the job than Jay Powell.”

Elizabeth Warren Asks the Fed to Break Up Wells Fargo [NYT]
Trump shattered tradition on Fed chair. Some Dems want Biden to do the same. [Politico]
Should Biden Reappoint Jerome Powell? It Depends on His Theory of Change. [NYT]
Dodd and Frank call on Biden to renominate Powell to chair the Fed [The Hill]

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Wells Fargo Bless this Mess

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By US government [Public domain], via Wikimedia Commons

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Image adapted from Flickr User Aranami.

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charles scharf

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