Wells Fargo CEO quits role as adviser to Federal Reserve

Jake Cordell
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Wells Fargo agreed to pay a $185m settlement this month (Source: Getty)

The head of Wells Fargo has stepped down from his role as an adviser to the US Federal Reserve amid the ongoing scandal over its creation of unauthorised bank accounts.

Chief executive John Stumpf resigned his position on the advisory council of the San Francisco Fed, which consists of banking chiefs and is designed to guide policymakers, just one day after chairwoman Janet Yellen expressed her own concern at the latest revelations in the saga.

Wells Fargo agreed to pay $185m for its "cross selling" failures, which involved opening nearly 2m unauthorised customer accounts, earlier this month. The culture of the bank has been brought into question, with aggressive targets, sales quotas and rewards for bank staff blamed for the episode.

Yellen, who oversees financial supervision of the US banking system, said she would make sure "incentives that are put in place ... are appropriate and don't serve to foster behaviour that could harm the public."

Stumpf, sporting an injured hand, appeared before the US Senate this week to face questions over the conditions which led to Wells Fargo agreeing to pay $185m for 'abusive' sales practices (Source: getty)

Stumpf also faced pressure from US politicians who wrote to the San Francisco Fed urging it not to reappoint him to a third one-year term.

A letter sent to the organisation by a number of Democratic senators said:

It would be ironic if the Federal Reserve, a key federal banking regulator tasked in part with ensuring the fair and equitable treatment of consumers in financial transactions, continued to receive special insights and recommendations from senior management of a financial institution that just paid a record-breaking fine ... for 'unfair' and 'abusive' practices.

Politicians, including Democratic presidential hopeful Bernie Sanders, also called on the US Department of Labour to investigate working conditions at the bank, claiming it could have "aggressively skirted" rules on working hours, overtime payments and pay.