Janet Yellen's Fed tenure may be the calm before the storm

Janet Yellen's Fed tenure may be the calm before the storm

"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", Yellen said in a statement.

After markets shut on her last workday in office, Federal Reserve Chair Janet Yellen conveyed a hit to one of the country's biggest banks: Wells Fargo and Co. won't be permitted to develop until the point that it tidies up.

The bank said the asset cap will remain in effect at least until the strengthened oversight plans and the findings of the outside review win Fed approval.

"The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers", she said in what was perhaps her last official act as Fed chair.

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Outgoing Federal Reserve Chair Janet Yellen said US stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble.

She follows in the footsteps of Ben Bernanke, her immediate predecessor as chair of the Fed, former vice chair Don Kohn, and Nellie Liang, former director of its division of financial stability.

Transcripts of Fed meetings from fall 2008, when Lehman Brothers' collapse ignited the most risky phase of the financial crisis, show that Yellen helped drive the Fed to unleash about everything in its economic arsenal, including slashing its key short-term interest rate to a record low near zero.

Powell, a Fed board member since 2012, is "thoughtful, balanced, dedicated to public service". Wells Fargo started bumbling through a spate of outrages 17 months prior, beginning with disclosures that branch workers opened a large number of records without client authorization to meet forceful deals targets.

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Wells Fargo has paid $185 million in fines and offered redress to harmed customers. She argued that the Fed could leave its key policy rate near zero for far longer than previously thought prudent. Elizabeth Warren, the Massachusetts Democrat, had requested the Fed oust Wells Fargo board members.

The Fed's move is the latest and most serious regulatory action against the bank over the past year and a half.

"The company's absence of viable oversight and control of consistence and operational dangers contributed in material approaches to the significant damage endured", the Fed's supervision executive, Michael Gibson, said in a different letter to the board.

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