On Tuesday, the Federal Reserve announced the termination of two enforcement actions imposed on Wells Fargo in 2011, while confirming that the bank's asset cap remains in effect. The actions were linked to subpar practices in mortgage services, foreclosures, and mortgage lending by a former subsidiary. Despite this development, the asset cap set by the Fed remains unchanged.
Wells Fargo's CEO, Charles Scharf, expressed that the Fed's actions demonstrate clear, meaningful progress." Scharf remarked, "Wells Fargo is a different company today, emphasizing the importance of complying with regulatory standards and internal expectations.
The removal of these longstanding Federal Reserve consent orders signifies a step forward for Wells Fargo, which has been working to address various regulatory restrictions since a sales practices scandal. Notably, in 2018, the Fed imposed a $1.95 trillion asset cap on the bank, limiting its expansion until issues were resolved. Removing this cap necessitates approval from the Fed's Board of Governors, with expectations pointing toward potential liberation by the first half of 2025.
Recent positive actions by regulators, including the Consumer Financial Protection Bureau lifting an order related to auto loans and mortgages, indicate a promising trajectory for Wells Fargo. Analysts predict that these developments align with the bank's progress towards the goal of eliminating the asset cap by 2025.
Throughout 2024, Wells Fargo's shares surged nearly 43%, surpassing the S&P 500 and other major bank indices, and continued to show positive momentum with a 1.5% increase in midday trading on Tuesday.