>> Wells Fargo slapped down again, this time with an unusually harsh penalty. No more growth until it fixes its problem. The punishment dull out on Friday by the Federal Reserve for years of cheating clients with dummy accounts to grow its business. The bank is now forced to keep it's asset size under two trillion dollars, it's size at the end of last year.
Regulators have rarely intervened directly in a bank's operations in the past, and officials say it's unprecedented for the Fed to order a bank to stop growing altogether. The Fed also blasted the Wells Fargo board and said the company will be replacing four of its 16 person board by the end of the year.
All this coming on Janet Yellen's last working day as the central bank's chairwoman. Wells Fargo's CEO, Timothy Sloan, on a Friday night conference call said the Fed actions are related to past conduct and they won't affect the banks financials. He added that the bank is open for business and will continue to make new loans.
But that didn't seem to reassure investors and the stock dropped sharply in Friday after hours trading. The latest punishment comes on top of $190 million settlement the bank reached in September 2016 over employees opening phony accounts in customer's names without their permission to artificially hit internal targets. The tally of bank accounts has since risen to as many as 3.5 million.
Now, Wells Fargo has 60 days to get the Fed a plan on how it will fix the problems. If the Fed approves the plan, the bank then has to hire third party consultants to make sure it's sticking to the plan and progressing until the Fed is satisfied.