Federal Reserve Chair Janet Yellen said her agency has started a review of the “disturbing” compliance failures at the biggest U.S. banks after lawmakers pressed her Wednesday over revelations that Wells Fargo had opened scores of bogus customer accounts.
“We are taking a comprehensive look at the biggest banks,” Yellen said in testimony before the House Financial Services Committee, referring to a “disturbing” pattern of recent violations. She declined to respond to the most heated questions about Wells Fargo, including whether the Fed should consider breaking it up.
Among the Wells Fargo questions she wouldn’t take the bait on was whether missteps involving more than two million improper accounts showed the lender was too big to manage. She declined to address the bank specifically, except to say it’s important to hold senior management accountable.
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Wells Fargo, the third largest U.S. bank by assets, is based in San Francisco. Its largest employment hub is Charlotte, where it has about 23,600 workers throughout the region.
The Fed’s review will encompass a variety of compliance concerns after breaches including mortgage abuses and banks’ manipulation of benchmark interest rates, Yellen said.
Last week, Yellen told reporters that Wells Fargo’s misconduct occurred within a part of the bank that is primarily regulated by the Office of the Comptroller of the Currency.
She said regulators have been “distressed” about the industry’s response to recent problems, adding that a focus for the Fed for the “next year or so” will be insisting that management prevent compliance failures and “ensure that employees are always acting in a legal and ethical manner.”