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The Federal Reserve steps up to protect consumers

On Feb. 2, 2018, the Federal Reserve froze

On Feb. 2, 2018, the Federal Reserve froze financial giant Wells Fargo's growth until it can prove it has improved its internal controls. Credit: AP / Matt Rourke

If no one else will look out for consumers, perhaps the nation’s central bank will.

The Federal Reserve is usually tasked with the far broader mission of making sure the U.S. economy remains on a solid footing. It’s rare to see Fed officials insert themselves into an individual bank’s problems, or to defend and protect that bank’s customers.

But that’s exactly what the Fed did on Feb. 2. On Janet Yellen’s last day as Fed chair, the Federal Reserve imposed severe penalties on Wells Fargo, forcing the financial giant to replace board members — and, in an extraordinary and rare move, preventing it from growing at all until “sufficient improvements” are made.

The Fed’s actions followed Wells Fargo’s horrific efforts to open as many as 3.5 million fake credit card and bank accounts in its customers’ names, without their consent, just to pump up its own earnings, fees and employee commissions. But even when banks have badly behaved, it’s usually the Consumer Financial Protection Bureau or other federal regulators that rein in the offenders and protect customers.

However, Yellen and the Fed knew better. They’ve watched as the CFPB’s power has waned, as President Donald Trump and his appointees have worked to loosen regulations and to limit actions the federal government can take against individual banks and financial firms.

Now, it’s up to Yellen’s successor, Jerome Powell, to take on the new Fed mantle as a fighter for consumers.

If he won’t, it’s possible no one else will.