Federal Reserve Lifts Wells Fargo Asset Cap After 7 Years

Wells Fargo announced a special $2,000 award for all full-time employees to mark the occasion.

Wells Fargo bank in Washington on Oct. 3, 2024. Madalina Vasiliu/The Epoch Times

The Federal Reserve on Tuesday lifted a longstanding asset cap on Wells Fargo, ending one of the most severe restrictions ever imposed on a U.S. bank.

The 2018 enforcement action barred the bank from increasing its total assets above its year-end 2017 level—roughly $1.9 trillion—until it addressed widespread risk management and compliance failures.

In a new order, the Fed said Wells Fargo has met the conditions required for the removal of the asset growth restriction, including improvements in oversight and a third-party review of its reforms.

“The removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies and that the bank has fulfilled the conditions required for removal of the growth restriction,” the central bank said in a June 3 statement.

Other provisions of the 2018 order remain in effect until Wells Fargo meets the remaining requirements.

Federal Reserve Gov. Michael Barr said the change resulted from “focused management leadership, strong board oversight, and strict supervision,” but added that all three factors will need to continue for the firm to maintain a sustainable approach.

Wells Fargo confirmed the decision in a June 3 statement and described the removal as a major milestone in its transformation.

“We are a different and far stronger company today because of the work we’ve done,” CEO Charlie Scharf said in a statement after the Fed’s announcement.

Scharf credited changes to the company’s business mix, executive team, and internal processes for helping meet the Fed’s conditions.

To mark the occasion, Wells Fargo announced a special $2,000 award for all full-time employees, which will mostly take the form of restricted stock grants.

“We wanted everyone – including tellers, contact center representatives, administrative assistants, operations staff, bankers, financial advisors, and corporate staff – to have an opportunity to own a part of Wells Fargo and hopefully benefit from our future success,” Scharf said.

Steven D. Black, chair of the company’s board, praised Scharf’s leadership and the board’s role in the transformation effort.

“Since he arrived in late 2019, Charlie has assembled a top-notch management team, overseen the details and the big picture of a major transformation effort, and made meaningful changes to improve returns through a global pandemic, periods of economic volatility and significant regulatory headwinds,” Black said.

The asset cap was introduced in response to revelations that Wells Fargo employees had opened millions of unauthorized accounts and engaged in other misconduct to meet sales targets. The Fed required the bank to overhaul its governance, board oversight, and risk controls before lifting the cap.

It was the first time the central bank had directly ordered a bank to stop growing in order to address widespread shortcomings.

The Fed board voted unanimously to lift the seven-year restriction.

Reuters contributed to this report.