Thu Sep 26 14:54:26 UTC 2024: ## Wells Fargo Takes Major Step Towards Lifting Asset Cap, Shares Surge
**San Francisco, CA** – Wells Fargo & Co. is nearing a crucial milestone in its long journey to escape a Federal Reserve asset cap imposed in 2018. The bank has submitted a third-party review of its risk and control overhauls to the Fed, a key step in the process to potentially lift the restrictions.
The submission, which follows years of planning, implementation, and external audits, was met with a surge in Wells Fargo’s share price, increasing by as much as 6.5% – its largest intraday gain in seven months.
The asset cap, implemented by former Fed Chair Janet Yellen, limits the bank’s size to its 2017 level of $1.95 trillion, hampering its ability to grow and generate profits. The sanction was imposed after a series of consumer abuses and compliance lapses, highlighting a pattern of regulatory missteps by the bank.
While Wells Fargo executives expect the cap to remain in place at least through next year, the submission marks a significant step forward. The Fed will now review the submitted materials and could request additional information or further work. Ultimately, lifting the cap requires a vote by the full Fed board.
The asset cap has had a significant financial impact on Wells Fargo, hindering its earnings potential and dragging down its stock price. The firm’s shares, while up 37% over the past year, are still below their pre-cap levels. During this time, rival JPMorgan Chase & Co. has grown its assets by 64%, adding nearly a whole Wells Fargo to its balance sheet.
CEO Charlie Scharf, who inherited the task of reforming the bank in 2017, has been leading the effort to lift the cap. His team submitted a plan in 2020 that was accepted by the Fed, and the firm has since been diligently implementing those changes.
The success of this latest submission and the subsequent Fed review will be closely watched by investors and industry experts. Lifting the asset cap would be a major win for Wells Fargo, signaling a significant improvement in its regulatory compliance and paving the way for future growth.
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