Sen. Elizabeth Warren grills Wells Fargo CEO: ‘You should be fired’
Wells Fargo shares plummeted Monday after the Federal Reserve hit it with an enforcement action late Friday for a wave of scandals at the San Francisco-based bank.
Shares of Wells Fargo, which has a large Charlotte presence, dropped more than 9 percent Monday to close at $58.16, costing the bank about $29 billion in market value. Shares dove at the start of trading as some analysts downgraded the stock in response to new restrictions placed by the Fed on the bank.
The declines came on a tumultuous day on Wall Street, with the Dow Jones Industrial Average closing down 1,175 points. Wells Fargo’s drop, however, was substantially bigger than that of its large-bank peers. Shares of Charlotte-based Bank of America fell more than 5 percent to $30.26.
In an unprecedented move, the Fed announced Friday it was restricting Wells Fargo’s growth as part of a cease-and-desist order that also requires Wells to improve its governance and risk-management processes. In addition to being banned from surpassing its asset size as of the end of last year, Wells will replace four current board members this year, the Fed said.
The Fed said the moves were in response to “recent and widespread consumer abuses and other compliance breakdowns by Wells Fargo,” citing the bank’s 2016 scandal over fake accounts and more recent issues such as improper practices involving auto insurance.
The regulator has also ordered the bank to complete an independent review by Sept. 30 of steps it must take to address its problems.
Analysts have expressed concerns about the development, which comes as the bank is already trying to repair its image since the accounts scandal.
In a research note, KBW Brian Kleinhanzl said Wells will have a harder time maintaining its market share, as a result of the Fed’s growth restrictions. Uncertainty also remains over when the issues with the Fed will be resolved, wrote Kleinhanzl, whose firm downgraded shares of Wells Fargo.