Wells Fargo Moves Toward Lifting Asset Cap After Regulator’s Decision

NEW YORK, USA — Wells Fargo is closer to lifting its asset cap after the U.S. Office of the Comptroller of the Currency (OCC) lifted a 2015 enforcement action against the bank on Thursday. This decision leaves just one major hurdle before the bank can fully move beyond the restrictions imposed by regulators.

The OCC action is the thirteenth enforcement action closed by Wells Fargo’s regulators since 2019 and the seventh this year, according to the bank. The remaining consent order, which includes a $1.95 trillion asset cap imposed by the Federal Reserve in 2018, requires Wells Fargo to improve its governance and controls after widespread consumer abuses.

CEO Charles Scharf, who has led a significant cleanup effort since assuming his position in 2019, highlighted the positive impact of the OCC’s decision. Following the announcement, shares of Wells Fargo rose by 1% before re-aligning with market trends. Analyst Stephen Biggar of Argus Research noted, “This shows that the bank and the new management have made tremendous progress. These consent orders getting terminated show that the issues have been resolved to regulators’ satisfaction.”

The OCC’s 2015 order was linked to the bank’s previous financial practices, which came under scrutiny following a scandal in 2016 about fake accounts. As a result, Wells Fargo has been under a $1.95 trillion asset cap since 2018, which limited its ability to grow its balance sheet until it resolved the underlying issues.

Chris Marinac, director of research at Janney Montgomery Scott, stated, “The environment is right to finally put the nail in the coffin for all of Wells Fargo’s past sins. It has been a long time, and the company has taken efforts to fix its issues.” Since 2018, Wells Fargo has faced public backlash and billions of dollars in fines for practices described by the Federal Reserve as “pervasive and persistent misconduct.”

Wells Fargo has managed its businesses carefully under the asset cap, particularly in the wholesale deposits and markets areas, which it expects to grow once restrictions are lifted, Scharf told analysts earlier this year. Reports indicated the bank is in the final stages of regulatory tests to lift the asset cap, targeting 2025 for this resolution.

With the lifting of these penalties, Wells Fargo is poised to expand again, allowing for a renewed focus on deposits, new accounts, and investment banking activities.