The Federal Reserve has dropped the hammer on Wells Fargo. 
 
 The Fed handed down unprecedented punishment late Friday for what it called the bank's "widespread consumer abuses," including its notorious creation of millions of fake customer accounts. 
 
 Wells Fargo won't be allowed to get any bigger than it was at the end of last year -- $2 trillion in assets -- until the Fed is satisfied that it has cleaned up its act. 
 
 Under pressure from the Fed, the bank agreed to remove three people from the board of directors by April and a fourth by the end of the year. 
 
 It is the first time the Federal Reserve has imposed a cap on the entire assets of a financial institution, according to a Fed official. 
 
 "We cannot tolerate pervasive and persistent misconduct at any bank," outgoing Fed Chairwoman Janet Yellen said in a statement. Friday was her last day on the job. 
 
 Wells Fargo (WFC) controls more money than any bank in the United States besides JPMorgan Chase, according to Fed data. But its reputation has been shattered over the past year and a half by a seemingly endless series of misconduct. 
 
 Most prominently, Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance. 
 
 The bank agreed to the Fed's conditions under what's known as a consent decree. In a statement, Wells Fargo said it is "confident" it can meet the Fed's requirements. 
 
 Related: Elizabeth Warren wants the Wells Fargo board wiped out 
 
 "We take this order seriously and are focused on addressing all of the Federal Reserve's concerns," said CEO Timothy Sloan, whose predecessor, John Stumpf, resigned a month after the fake-accounts scandal broke. 
 
 The Fed will require Wells Fargo to turn in detailed plans of what it has done, and intends to do, to fix the board. Wells Fargo must also submit a broader explanation for how it will improve its internal controls and its handling of risk. Those plans are due in 60 days. 
 
 By September 30, Wells Fargo must engage a third party to review how the bank is executing those plans. 
 
 Wells Fargo will still be able to accept consumer deposits and make loans to consumers, the Fed official said. However, it will be up to the bank to determine what changes may need to be made to its business in order to stay under the asset cap. 
 
 Wells Fargo stock fell more than 6% in after-hours trading Friday. 
 
 Sen. Elizabeth Warren, a Massachusetts Democrat and the most prominent of Wells Fargo's many critics in Congress, had begged Yellen to go after the board. Warren said in July that nothing would change at the big banks until "actual human beings are held accountable." 
 
 In a tweet Friday, Warren lauded Yellen for taking action and reiterated the case for tough regulation. 
 
 Chair Yellen's decision today to freeze the growth of Wells Fargo until it shapes up also demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them. This one hits them where it hurts. — Elizabeth Warren (@SenWarren) February 3, 2018 
 
 "Chair Yellen's decision today to freeze the growth of Wells Fargo until it shapes up also demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them," Warren wrote. "This one hits them where it hurts." 
 
 The scandal broke into public view in September 2016, when regulators revealed that Wells Fargo had created millions of bank accounts for customers without their knowledge. The company admitted the fake accounts dated back to 2009. 
 
 Since then, Wells Fargo has faced lawsuits, federal and state investigations, fines, and a grilling from Congress. The company ousted its CEO, John Stumpf, in October 2016. The number of customers opening new accounts at the bank plummeted. Workers alleged they were fired or retaliated against for speaking up about misbehavior. 
 
 Legal bills cost the company $3.3 billion last quarter, Wells Fargo said in January. 
 
 Related: I called the Wells Fargo ethics line and was fired 
 
 And the fake accounts aren't Wells Fargo's only problem. 
 
 Last July, the company admitted it forced auto insurance on as many as 570,000 borrowers who didn't need it. About 20,000 of those customers had their cars wrongfully repossessed in part due to these unwanted insurance charges. 
 
 In August, Wells Fargo was sued by small business owners who say the bank used deceptive language to dupe mom-and-pop businesses into paying "massive early termination fees." 
 
 The company was in the headlines again in October for charging about 110,000 mortgage borrowers undue fees. 
 
 The Justice Department fined the company in November for illegally repossessing cars from more than 860 service members. Federal law requires banks to get a court order before repossessing a car from members of the military. 
 
 --CNNMoney's Matt Egan contributed to this report. 

 Wells Fargo is struggling to come back from a scandal in which millions of phony accounts were created without customers' consent (AFP Photo/Frederic J. BROWN) 
 
 Washington (AFP) - The US Federal Reserve on Friday ordered troubled commercial banking giant Wells Fargo to halt its expansion until it improves its governance, following "pervasive and persistent misconduct." 
 
 The Fed order restricts the bank from growing any larger "until it sufficiently improves its governance and controls," and comes as the company struggles to recover from the two-year-old scandal in which it uncovered millions of phony accounts created without consent of customers. 
 
 "We cannot 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," outgoing Fed Chair Janet Yellen said in a statement. 
 
 "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. 
 
 The statement said Wells Fargo had prioritized growth over ensuring effective risk management. 
 
 Wells Fargo became engulfed in scandal in 2016 after admitting its employees had opened 3.5 million phony deposit accounts and lines of credit without the knowledge of its clients as part of high-pressure retail sales tactics the bank touted to investors but has since repudiated. 
 
 This led to damaged credit scores and millions in unjustified fees for customers. 
 
 Wells Fargo has paid $185 million in fines and offered redress to harmed customers. In October, CEO John Stumpf stepped down in the wake of the scandal, which cost it the top ranking as the world's largest bank by market capitalization. 
 
 The Fed specifically cited the need to strengthen oversight by the bank's board of directors, and sent letters outlining the failures to Stumpf and another former director. 
 
 Concurrently with the Fed action, Wells Fargo will replace three current board members by April and a fourth by the end of the year. 

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 After markets closed on her final workday in office, Federal Reserve Chair Janet Yellen delivered a blow to one of the nation’s largest banks: Wells Fargo & Co. won’t be allowed to grow until it cleans up. 
 
 Fed officials said the San Francisco-based lender’s pattern of consumer abuses and compliance lapses called for an unprecedented sanction. Until Wells Fargo addresses shortcomings in areas including internal oversight, it can’t take any action that would boost total assets beyond their level at the end of 2017, without the Fed’s permission. The bank said after-tax profit in 2018 would be reduced by $300 million to $400 million and its stock slumped in late trading Friday. 
 
 “This is akin to the last scene in ‘ The Godfather,”’ said Isaac Boltansky, an analyst at Compass Point Research & Trading. “Chair Yellen decided to handle unfinished business on her way out the door.” 
 
 Yellen’s act stands out at a time when the Trump administration is looking to dial back some of the financial regulations put in place after the 2008 global financial crisis. Those moves include watering down enforcement actions at the Consumer Financial Protection Bureau and proposing revisions to Dodd-Frank reforms on Wall Street. 
 
 Yellen Admits Disappointment Over Her Exit in Rare Interview 
 
 Still, President Donald Trump singled out Wells Fargo in a Twitter message in December: “Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!” 
 
 Wells Fargo began stumbling through a spate of scandals 17 months ago, starting with revelations that branch employees opened millions of accounts without customer permission to meet aggressive sales targets. The company kept coming under fire after revealing that auto-loan clients were forced to pay for unwanted car insurance and that mortgage customers were improperly charged fees. 
 
 On Friday night, Fed officials said they’d been working on their order for a while, and that the company had just finally agreed to it. The announcement came hours before Yellen’s term was to expire, hitting the biggest bank in her former district. She was president of the San Francisco Fed from 2004 to 2010. 
 
 ‘Persistent Misconduct’ 
 
 Regulators can’t allow “pervasive and persistent misconduct at any bank,” Yellen said in a statement. She also sent a letter on Friday to Senator Elizabeth Warren, a Massachusetts Democrat who’s among the bank’s -- and the financial industry in general’s -- most prominent critics. 
 
 “The firm has much to do to earn back the trust of its customers, supervisors, investors and the public,” Yellen told the lawmaker. The growth restriction “is unique and more stringent than the penalties the Board has imposed against other bank holding companies for similar unsafe and unsound practices.” 
 
 Warren replied in a statement: “Her decision today demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them.” 
 
 Wells Fargo’s assets are now capped at $1.95 trillion. Fed officials say the bank is welcome to continue taking deposits and lending to customers, but it must stay below the limit. The firm’s compliance will be measured as an average of assets over two quarters, according to the regulator. 
 
 The Fed set a Sept. 30 deadline for the bank to outline reforms and have them reviewed by an outside firm. 
 
 ‘Manageable’ Effects 
 
 The near-term financial effects of the growth restrictions are "likely manageable, though scrutiny remains an overhang," Bloomberg Intelligence analysts Alison Williams and Neil Sipes wrote Saturday. 
 
 "Concerns center on broader implications for a company that has built a culture around cross-selling," the analysts wrote. "Moving past crisis-related residential mortgage-backed securities issues would also remove a risk." 
 
 Even after improvements the bank made in the past 17 months, Fed officials “believe there is more work to be done, and we agree,” Chief Executive Officer Timothy Sloan told analysts on a conference call Friday night. 
 
 Sloan took charge in late 2016 and has spent much of his tenure apologizing to customers and employees, vowing to restore confidence in the bank. In Friday’s presentation, he and Chief Financial Officer John Shrewsberry kept a cool focus on numbers. 
 
 Avoiding Growth 
 
 Options for preventing asset growth include limiting deposits from companies and other banks, and dialing back trading assets and other short-term investments, according to the presentation. A profit decline of as much as $400 million represents less than 2 percent of last year’s $22.2 billion of net income. 
 
 Executives still plan to increase the amount of capital returned to shareholders through dividends and share repurchases beyond the $14.5 billion that investors reaped in 2017. And they’re sticking with cost-cutting targets that include shaving about $4 billion in annual expenses by the end of 2019. 
 
 Last year, Wells Fargo spent $3.9 billion on costs related to risk management alone, Sloan said. But executives aren’t expecting a surge in expenses from outside consultants or, for now, to boost their estimate of reasonably possible legal losses. “There’s nothing here," Shrewsberry said. "There’s no settlement amount or civil money penalty or anything like that.” 
 
 Board Overhaul 
 
 Yet more changes are pending atop the bank. Four members of the company’s board are to be replaced by the end of the year, expanding an overhaul of the panel, the Fed said Friday. 
 
 Wells Fargo elected six independent directors in 2017, and three other people plan to retire before an annual shareholders meeting, the company said. Nine current board members including Chairman Betsy Duke were on the panel before the scandals began erupting. After planned replacements this year, five may remain. 
 
 Oscar Suris, a company spokesman, declined to name which directors may leave. Enrique Hernandez, Lloyd Dean and John Chen have been directors for more than a decade. 
 
 ‘Substantial Harm’ 
 
 The Fed instructed the bank’s board to engage in more intrusive oversight of Wells Fargo’s senior managers and come up with a plan to hold them accountable if they fall short. The board also was ordered to detail its overhaul of how the bank pays senior executives, and how it will punish them if they violate bank policies or government rules, or enable “adverse risk outcomes.” Wells Fargo’s compensation programs, the Fed said, played a large role in the bank’s compliance failures. 
 
 “The firm’s lack of effective oversight and control of compliance and operational risks contributed in material ways to the substantial harm suffered,” the Fed’s supervision director, Michael Gibson, said in a separate letter to the board. 
 
 Wells Fargo paid $185 million to resolve the initial sales scandal. The Office of the Comptroller of the Currency -- the primary regulator for the firm’s banking operations -- soon followed up with more sanctions, including its own effort to squeeze the lender’s growth in late 2016. 
 
 Late last year, the OCC told the bank’s board that authorities may take additional enforcement actions over the auto insurance and mortgage improprieties, people familiar with the situation said. 
 
 — With assistance by Kenneth Pringle, and Ros Krasny
– In what CNN calls an "unprecedented" punishment, the US Federal Reserve on Friday ordered Wells Fargo to halt all growth until "it sufficiently improves its governance and controls" in the wake of "pervasive and persistent misconduct." The bank admitted in 2016 to opening 3.5 million fake accounts and lines of credit without its customers' knowledge, leading to damaged credit reports and millions in bogus fees, AFP reports. The bank also, among other things, strong-armed up to 570,000 customers into getting auto insurance they didn't need. Under the Fed's order, Wells Fargo will be frozen at $2 trillion in assets. It has 60 days give the Fed its plans for improving and until the end of September to be reviewed by a third party. One officials says it's the first time the Fed has capped the growth of an entire financial institution. "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," Fed chair Janet Yellen says. She issued the order on her last day in the role. “This is akin to the last scene in The Godfather," one analyst tells Bloomberg. “Chair Yellen decided to handle unfinished business on her way out the door.” Wells Fargo, which says it's "confident" it can meet the conditions set by the Fed, saw its stock fall more than 6% following the order. Sen. Elizabeth Warren lauded Yellen's decision, saying it "hits them where it hurts." "We have the tools to rein in Wall Street—if our regulators have the guts to use them," the Wells Fargo critic tweeted.