Wells Fargo & Company has confirmed that the Federal Reserve has determined the company has met all conditions required to remove the $1.95 trillion cap on growth in total assets imposed in its 2018 consent order.
The consent order was placed on Wells Fargo in punishment for a fake-account scandal and other deceptive sales practices that became known in 2016.
“Under the 2018 enforcement action, the bank was required to improve its governance and risk management program, and complete a third-party review of these improvements, for the growth restriction to be removed,” said the Fed in a statement. “The Federal Reserve has completed its review of the bank’s remediation efforts and required third-party assessments, and has completed its own assessment of Wells Fargo’s corporate governance and firmwide risk management programs. 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.”
Conditions for Wells Fargo to lift the restrictions outlined in the order included:
- Requirements to support board effectiveness and improvements in the company’s firmwide compliance and operational risk programs.
- Requirement for a third-party independent review of the work completed by the company.
“The Federal Reserve’s decision to lift the asset cap marks a pivotal milestone in our journey to transform Wells Fargo. We are a different and far stronger company today because of the work we’ve done,” said Wells Fargo CEO Charlie Scharf. “In addition, we have changed and simplified our business mix, and we have transformed the management team and how we run the company. We have been methodically investing in the company’s future while improving our financial results and profile. We are excited to continue to move forward with plans to further increase returns and growth in a deliberate manner supported by the processes and cultural changes we have made.”
Wells Fargo has approximately $1.9 trillion in assets, through a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance,
Upon announcement of the news, Wells Fargo stock rose 2.9% in after-hours trading.
Michael S. Barr, member of the Board of Governors of the Federal Reserve System, stated, ” Removal of the asset cap represents successful remediation to the required standard based on focused management leadership, strong board oversight, and strict supervision holding the firm accountable. All three will need to continue for the firm to have a sustainable approach.”
According to Scharf, all Wells Fargo full-time employees will receive a $2,000 award (in the form of restricted stock grants) to mark the occasion.
“This is a huge accomplishment for the 215,000 employees of Wells Fargo, who all contributed to this milestone–whether they worked directly on the risk and control efforts, supported the work indirectly by helping us embed a different way of working into our culture, or continued to serve our customers and clients day in and day out through difficult conditions,” added Scharf. “Our employees have invested so much of themselves into the company in recent years, and as a demonstration of our appreciation for what we have accomplished together, all full-time employees of Wells Fargo will receive a special $2,000 award.”
Including today’s lifting of the asset cap, Wells Fargo has resolved all 14 consent orders that had been imposed on it.
“I want to thank our Board of Directors for their work in achieving today’s outcome, including the substantial changes we have made to board composition and oversight,” said Steven D. Black, Chairman of Wells Fargo’s Board of Directors. “On behalf of the entire Board, I also want to thank the management team, and in particular, Charlie for his inspired leadership. 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. He has been instrumental in advancing our goal to make Wells Fargo one of the most well-respected, consistently growing financial institutions in the country.”
