Stock Market

Why Secretary Yellen may push to lift the Wells Fargo ban put in place by Chair Yellen

Wells Fargo
WFC,
+2.80%

was slapped with an unprecedented asset-growth ban in 2018 by then Federal Reserve Chair Janet Yellen, after a series of scandals at the San Francisco bank.

Could Yellen, assuming she is confirmed as Treasury secretary, help remove the ban she put in place?

That is a theory advanced by Zoltan Pozsar, who writes about bank financing for Credit Suisse. By his calculations, JPMorgan Chase
JPM,
+1.34%
,
Citigroup
C,
+2.24%

and Bank of America
BAC,
+1.30%

have helped absorb three-quarters of the reserves injected into the banking system by the Federal Reserve last year.

“The ban was imposed on Chair Yellen’s watch, and Secretary Yellen may get involved in soon lifting that ban. War finance involves lots of central planning, and freeing up balance sheet to fight the pandemic is good central planning,” said Pozsar in a note to clients.

If Wells Fargo’s asset-growth ban is lifted, Pozsar says the big four U.S. banks can absorb another $900 billion of reserves — but only $500 billion if it isn’t.

Wells Fargo has shaken up its ranks of executives, and this week established a new division to oversee the bank’s interactions with consumers. Wells Fargo illegally opened up accounts on behalf of customers without their consent, among the many charges lobbed at the bank. The decision to lift the Wells Fargo asset-growth ban will rest with the board of governors of the Federal Reserve, according to Yellen’s successor, Jerome Powell, in a letter to Sen. Elizabeth Warren, the Massachusetts Democrat.

Powell has met regularly with Treasury Secretary Steven Mnuchin and is likely to continue to do so if and when Yellen leads the department. The head of the Treasury oversees the Financial Stability Oversight Council, which brings together all the financial regulators under one umbrella.

Related News  The Powerball jackpot may now be $500 million, but this Connecticut man's story serves as a warning about lottery addiction

For more updates check below links and stay updated with News AKMI.
Life and Style || Lifetime Fitness || Automotive News || Tech News || Giant Bikes || Cool Cars || Food and Drinks

Source

Tags
Show More

Related Articles

Back to top button

usa news wall today prime news newso time news post wall

Close