The Federal Reserve ordered Wells Fargo on Friday to halt its growth, citing "widespread consumer abuses and other compliance breakdowns" at the bank.
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The Federal Reserve Board said in a statement that it "would restrict the growth of the firm until it sufficiently improves its governance and controls. Concurrently with the Board’s action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year. "
The bank is barred from growing beyond its size at the end of 2017 until it has satisfied the Fed that it has improved its compliance and governance polices, the Fed said. The bank's board must submit a plan within 60 days outlining how it plans to address the Fed's concerns.
The Fed action follows sustained compliance issues at Wells Fargo, which has already paid hundreds of millions of dollars in fines to various regulators for abusing retail customers.
Shares of Wells Fargo fell about 2 percent in light post-market trading.
(Reporting by Pete Schroeder)