Departing US Fed Chair Yellen To Join Think Tank Brookings Institute

Sean Reid
February 7, 2018

"I don't want to say too high". Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017. Yellen usually managed to shed some light on the Fed's thinking about its rate policy while cautioning that any future policy changes would hinge on the latest economic data. Her supporters hail her effectiveness at pulling the central bank through the crisis then managing its way back out; detractors say she inflated financial bubbles to get there, the long-term effects of which will be disastrous. "Our overall judgment is that, if there were to be a decline in asset valuations, it would not damage unduly the core of our financial system".

As part of an agreement with regulators, Wells Fargo will replace four board members this year as it struggles to recover from a 2016 scandal in which it uncovered millions of phony accounts created without customer consent.

Wells Fargo stock has risen 12 percent in the last 12 months, lagging the S&P Financials Sector's 26 percent increase as litigation expenses related to the scandal helped inflate its costs. "Price-earnings ratios are near the high end of their historical ranges".

The Fed cited "consumer abuses and compliance breakdowns", referring to the bank's opening of 3.5 million accounts that may not have been authorized by customers. The organization continued experiencing harsh criticism in the wake of uncovering that vehicle advance customers were compelled to pay for undesirable auto protection and that home loan clients were dishonorably charged expenses.

The Fed ordered the bank to submit a plan for improving board oversight and risk management. Its board chair, Betsy Duke, is a former Fed governor, and it recently hired Sarah Dahlgren, a former New York Fed official, as its head of regulatory relations.

"We can not tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again", said Yellen, whose term as head of the Fed ended Saturday.

Wells Fargo chose six autonomous chiefs in 2017, and three other individuals intend to resign before a yearly investors meeting, the organization said.

In letters sent to Wells Fargo board members, Michael Gibson, the Fed's director of supervision and regulation, said those problems show the bank's board did not properly oversee the bank.

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