Federal Reserve Lifts Asset Cap on Wells Fargo

Wells Fargo has been released from a seven-year-long $1.95 trillion cap on its assets, after the U.S. Federal Reserve lifted the regulatory measure on Tuesday, June 3, 2025. This decision allows the bank to pursue unimpeded growth. The move is seen as a significant victory for CEO Charlie Scharf, who has been leading the bank's cleanup efforts since taking the top position in 2019. Following the announcement, Wells Fargo's shares reportedly rose by more than 2% as investors reacted to the potential for the company's expansion.

Brian Mulberry, client portfolio manager at Zacks Investment Management, commented on the development: "It will be a significant bump for the stock in the near term and also paves the way for long-term growth as they don't have to manage their business around the asset cap now."

The Federal Reserve had imposed the unprecedented restriction in 2018 following years of misconduct at the bank, including a widespread scandal where employees opened millions of unauthorized customer accounts. However, in a statement, the Fed noted that the bank had made "substantial progress" in addressing its deficiencies, which included improvements to its governance and risk-management programs, and the completion of a third-party review of its overhaul efforts. The Fed board's vote to lift the restriction was unanimous. This measure was the first instance where the central bank directly ordered a bank to cease growth to address widespread shortcomings.

The decision represents a major step in the bank's ongoing efforts to repair damage from scandals that emerged in 2016, which led to public criticism and billions of dollars in fines. Charlie Scharf called the lifting of the cap a "pivotal milestone" in the bank's transformation. He stated in a release, "We are a different and far stronger company today because of the work we've done," adding that all full-time bank employees would receive a $2,000 award to mark the achievement.

While the bank remains under some additional oversight from the Fed as part of the 2018 order, the removal of the asset cap signifies a major shift for the nation's fourth-largest lender. The prior scandals had resulted in the ousting of multiple executives, as regulators imposed fines and restrictions. Years of regulatory scrutiny followed the 2016 scandal, which also revealed the bank charged unnecessary mortgage fees and forced customers to purchase unwanted car insurance, often to meet sales goals. The bank paid billions in penalties and faced numerous lawsuits from customers and shareholders.

Before Scharf's appointment as CEO, two former chief executives departed in the wake of the controversy. Wells Fargo also became a focal point of criticism in Washington, with lawmakers calling for executive removals and potential break-up of the bank. The lender has cleared numerous consent orders this year, and over a dozen since 2019. Consent orders are public enforcement actions, often accompanied by fines, instructing banks to rectify problems promptly.

Scharf had previously stated last year that the asset cap hindered the bank's ability to accept more corporate deposits and expand its trading business, unlike its peers. He told analysts in October that the bank had been carefully managing its wholesale deposits and markets businesses to comply with the cap, and expected to expand in those areas once restrictions were lifted.