The Federal Reserve removed its $1.95 trillion asset limit which allows Wells Fargo to conduct business expansion without restrictions for the first time since 2014. The Fed’s decision represents a major achievement for CEO Charlie Scharf who has dedicated his efforts to rebuild trust and compliance at the scandal-ridden bank since 2019.
The Fed’s announcement triggered a 2% increase in Wells Fargo stock prices because investors believe the bank can now expand its credit card and wealth management and commercial banking operations. The Federal Reserve established the asset cap in 2018 to penalize Wells Fargo for its fake accounts scandal which involved millions of unauthorized account openings.
The Federal Reserve declared Wells Fargo has achieved major advancements in risk management and corporate governance through its third-party review of its reform initiatives. The central bank’s board members voted as one to eliminate the cap which analysts interpret as a positive sign for the bank’s recovery.
The accomplishment marks a crucial moment for Wells Fargo according to Scharf who announced that all full-time staff members will receive a $2,000 reward. Financial institutions should maintain customer interests as their core focus when developing growth strategies according to the Fed’s recent decision.
