Wells Fargo & Company (WFC); Stock Jumps Almost 4% After Seven-Year Growth Freeze Ends as Fed Eases Restrictions

TLDR;

Wells Fargo is now free to grow after the Fed lifted a cap imposed in 2018, stock surges 3.71% The decision reflects years of internal reforms and improved oversight. CEO Charlie Scharf says the bank is “far stronger” and “transformed.” Employees will receive a $2,000 award in recognition of their efforts.

Wells Fargo & Company (WFC) closed Tuesday with a solid gain of 1.24%, ending the day at $75.65. In pre-market trading on Wednesday, it further rose by $2.81, or +3.71%, reaching $78.46. The stock’s upward movement was driven by major regulatory news: after more than seven years under strict oversight, the Federal Reserve lifted the asset cap that had limited the bank’s growth since 2018. This decision frees Wells Fargo to expand its balance sheet once again, fueling investor optimism.

Notably, that restriction had been placed on Wells Fargo following one of the most damaging scandals in modern banking history, when it was found to have opened millions of unauthorized customer accounts.

The asset cap was the first of its kind for a U.S. bank and reflected the severity of the misconduct. It was meant to halt Wells Fargo’s growth until the firm could show that its governance, compliance systems, and internal controls were fixed. The cap limited Wells Fargo’s total assets to roughly $1.95 trillion, the size it had at the end of 2017.

A Long Road of Reforms 

In the years since, Wells Fargo has undergone a major overhaul. Leadership changes, cultural shifts, and structural reforms became central to the bank’s recovery strategy. Charlie Scharf, who became CEO in 2019, led many of these efforts. He came from outside the bank, and his mandate was clear: restore trust and credibility.

“The Federal Reserve’s decision to lift the asset cap marks a pivotal milestone in our journey to transform Wells Fargo,” Scharf said Tuesday. “We are a different and far stronger company today because of the work we’ve done.”

This work included simplifying business operations, revamping internal oversight, and undergoing reviews by both the Fed and an independent third party. The Fed acknowledged the bank’s progress in a statement, noting that it had met the “conditions required” to have the cap lifted.

Wells Fargo Employees Rewarded

In a message to staff, Wells Fargo confirmed the asset cap removal and announced a special award for employees.

“Wells Fargo Confirms that the Federal Reserve Has Removed the Limits on Growth in Total Assets Imposed in its 2018 Consent Order,” the bank stated.

Notably, full-time employees will receive a $2,000 stock award, a gesture intended to recognize the collective effort behind this milestone.

Scharf emphasized the importance of the bank’s workforce in reaching this point, saying, “This is a huge accomplishment for the 215,000 employees of Wells Fargo, who all contributed to this milestone.”

The move is expected to renew investor interest in the bank, with some analysts projecting that lifting the cap could add significantly to earnings. It also allows the company to pursue new deposits and loans, expand trading operations, and strengthen its presence in competitive markets.

Regulatory Shadow Still Lingers

Despite this victory, Wells Fargo is not fully out of the regulatory woods. Some elements of the 2018 enforcement order remain in place, and the bank is still subject to another agreement last September with the Office of the Comptroller of the Currency. These include requirements to improve anti-money-laundering efforts and sanctions compliance.

Still, Tuesday’s development signals a turning point for Wells Fargo, whose reputation had been battered since the fake accounts scandal first came to light in 2016. That moment triggered a cascade of investigations, fines, executive resignations, and operational reviews that reshaped the company from the ground up.

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