The Federal Reserve has lifted the $1.95 trillion asset cap on Wells Fargo. The restriction was imposed in 2018 due to a series of scandals. This decision allows Wells Fargo to pursue growth opportunities unimpeded.
CEO Charlie Scharf announced that all full-time employees would receive a $2,000 bonus to commemorate the lifting of the cap. The bank’s shares rose by more than 2% following the announcement. The lifting of the cap is seen as a pivotal milestone in Wells Fargo’s transformation.
“We are a different and far stronger company today because of the work we’ve done,” Scharf said in a statement. The unprecedented restriction was imposed by the Fed following years of high-profile missteps at the bank. This included a scandal where employees opened millions of unauthorized accounts for customers.
The bank’s governance and risk-management programs have since undergone substantial improvements. Wells Fargo has faced significant regulatory scrutiny over the years. This resulted in billions of dollars in fines and the ouster of multiple executives.
Fed lifts Wells Fargo restrictions
The bank was also criticized for charging unnecessary mortgage fees and forcing drivers to buy car insurance they did not need. The decision by the Fed board was unanimous, acknowledging Wells Fargo’s substantial progress.
However, the bank will still face some additional oversight to ensure continued compliance with regulatory standards. Scharf has previously stated that the asset cap was limiting Wells Fargo’s ability to take in more corporate deposits and expand its trading business. With the restrictions now lifted, Wells Fargo is expected to expand in these areas.
This development concludes a challenging period for Wells Fargo. The bank has been working to clear numerous consent orders. These public enforcement actions, often accompanied by fines, instructed the bank to fix its problems within a stipulated timeframe.
The lifting of the cap represents the culmination of years of regulatory efforts. It reflects Wells Fargo’s ongoing commitment to improving its governance and compliance programs. The bank’s progress has been closely monitored by regulators.
The recent decision underscores a significant turning point in its journey towards rehabilitation and growth.