The asset cap requirement for Wells Fargo is expected to be lifted next year
Wells Fargo's asset cap requirement may be lifted in 2025. Following this news, the stock rose nearly 3% in pre-market trading. The bank is in the final stages of passing regulatory tests to lift the $1.95 trillion asset limit. The Federal Reserve imposed restrictions on it in 2018 due to its involvement in a fake accounts scandal in 2016. Although Wells Fargo has taken steps to improve governance and risk management, U.S. Senator Warren stated that the asset cap cannot be lifted until risk management and compliance issues are addressed
According to reports, Wells Fargo's (WFC.US) asset cap requirement may be lifted by 2025, which boosted the stock to rise nearly 3% in pre-market trading on Tuesday.
Insiders indicate that the bank is in the final stages of passing regulatory tests to lift the $1.95 trillion asset cap, potentially as early as the first half of 2025.
It is understood that the Federal Reserve imposed asset restrictions on Wells Fargo in 2018 as a punishment after the bank disclosed in 2016 that it had opened millions of fake accounts without customer permission to meet sales quotas.
The company has also been fined billions of dollars for this scandal and other violations of consumer rights, and has been ordered to strengthen governance and risk management controls.
Wells Fargo, the Federal Reserve, and the San Francisco Federal Reserve declined to comment on the matter.
Charlie Scharf was appointed CEO of Wells Fargo in 2019 with the task of meeting regulatory demands and terminating the consent order against the company.
In February of this year, the Office of the Comptroller of the Currency terminated the consent order related to the 2016 fake accounts scandal. The order required the bank to completely reform the way it offers and sells products and services to consumers and to take additional measures to protect its customers and employees.
In September, it was reported that Wells Fargo submitted a risk and control review report to the Federal Reserve, which is an important step toward lifting the asset cap. However, earlier that month, the Office of the Comptroller of the Currency took enforcement action against the bank due to deficiencies in its financial crime risk management practices and anti-money laundering internal controls.
Additionally, U.S. Senator Elizabeth Warren sent a letter to Federal Reserve Chairman Jerome Powell and Vice Chairman for Bank Supervision Michael Barr on Monday, stating that the $1.95 trillion asset cap requirement cannot be lifted until Wells Fargo addresses its risk management and compliance issues