US Federal Reserve lifts Wells Fargo’s asset cap
The US Federal Reserve has lifted a $1.95tn cap on Wells Fargo’s total assets, ending a restriction imposed in 2018 after a series of scandals exposed at the bank.
The cap was introduced following revelations that Wells Fargo employees had opened unauthorised accounts to meet sales targets.
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Investigations found that staff moved funds without customer consent, charged unnecessary fees, and enrolled clients in credit products without approval.
Further scrutiny revealed the bank had charged unwarranted mortgage fees and forced customers to buy unwanted car insurance.
To lift the restriction, the Federal Reserve required Wells Fargo to meet conditions including improvements to board oversight, compliance systems, and operational risk management.
An independent third-party review was also mandated, alongside direct assessments by the Fed.
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By GlobalData“The removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies”, the Fed Reserve said in a press statement.
Charlie Scharf took over the reins of the bank as CEO in 2019 to lead its turnaround.
Wells Fargo board of directors chair Steven D. Black said: “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.”
In recognition of employee contributions, Scharf announced a $2,000 award for all full-time staff, mostly in the form of restricted stock.
Scharf stated: “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.
“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.”
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