The Federal Reserve has lifted the asset growth restriction it had placed on Wells Fargo, one of the nation’s largest banks.
The bank had an asset growth restriction imposed on it by the Fed back in 2018. Under the 2018 action, the bank was required to improve its governance and risk management program and complete a third-party review of these improvements in order for the growth restriction to be removed.
This week, the Federal Reserve determined that Wells Fargo has met all the conditions required by the 2018 enforcement action for removal of the growth restriction. According to the Fed, the removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies.
The conditions to lift the restriction outlined in the order included wide-ranging requirements to support board effectiveness and improvements in the company’s firmwide compliance and operational risk programs. In addition, it included a requirement for a third-party independent review of the work completed by the company. This third-party review was in addition to reviews the Federal Reserve undertook directly.
“The Federal Reserve’s decision to lift the asset cap marks a pivotal milestone in our journey to transform Wells Fargo. We are a different and far stronger company today because of the work we’ve done,” Wells Fargo CEO Charlie Scharf said. “In addition, we have changed and simplified our business mix, and we have transformed the management team and how we run the company. We have been methodically investing in the company’s future while improving our financial results and profile. We are excited to continue to move forward with plans to further increase returns and growth in a deliberate manner supported by the processes and cultural changes we have made.”
Scharf called it a huge accomplishment for the 215,000 employees of Wells Fargo that contributed to the achievement. In fact, all employees will be rewarded for their efforts.
“Our employees have invested so much of themselves into the company in recent years, and as a demonstration of our appreciation for what we have accomplished together, all full-time employees of Wells Fargo will receive a special $2,000 award,” Scharf said. “For most, it will be in the form of a restricted stock grant. A $2,000 award means different things for different people, but we wanted everyone – including tellers, contact center representatives, administrative assistants, operations staff, bankers, financial advisors, and corporate staff – to have an opportunity to own a part of Wells Fargo and hopefully benefit from our future success.”
Steven Black, chair of Wells Fargo’s Board of Directors, thanked the board for its contributions, including the substantial changes made to board composition and oversight. He also commended the CEO, Scharf, for leading the effort.
“On behalf of the entire Board, I also want to thank the management team, and in particular, Charlie for his inspired leadership,” Black said. “Since he arrived in late 2019, Charlie has assembled a top-notch management team, overseen the details and the big picture of a major transformation effort, and made meaningful changes to improve returns through a global pandemic, periods of economic volatility and significant regulatory headwinds. He has been instrumental in advancing our goal to make Wells Fargo one of the most well-respected, consistently growing financial institutions in the country.”