Yizhu Wang

Tue, Jun 3, 2025, 6:04 PM4 min read

(Bloomberg) -- Wells Fargo & Co. finally escaped a Federal Reserve asset cap that has restricted its size for more than seven years, unleashing the firm from the unprecedented punishment in a major win for Chief Executive Officer Charlie Scharf. The bank’s shares surged.

Most Read from Bloomberg

• Where the Wild Children’s Museums Are

• Billionaire Steve Cohen Wants NY to Expand Taxpayer-Backed Ferry

• The Global Struggle to Build Safer Cars

• At London’s New Design Museum, Visitors Get Hands-On Access

• LA City Council Passes Budget That Trims Police, Fire Spending

The Fed said in a statement Tuesday that Wells Fargo met all conditions to remove the restriction required by a 2018 enforcement action. The central bank completed its review of Wells Fargo’s remediation efforts and third-party assessments, as well as its own assessment of the bank’s corporate governance and risk management programs, it said.

The hotly anticipated verdict closes the door on nearly a decade of scandals at the fourth-largest US lender and allows the bank to pursue growth again. Since the cap was imposed in February 2018, it became the most-feared punishment in banking and caused Wells Fargo to miss out on an estimated $39 billion in profits, according to Bloomberg calculations.

“The Federal Reserve’s decision to lift the asset cap marks a pivotal milestone in our journey to transform Wells Fargo,” Scharf said in a statement. “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.”

To mark the milestone, the bank will give all full-time employees an award of $2,000, Scharf said. For most, it will be in the form of a restricted stock grant, he said.

Wells Fargo shares briefly jumped more than 10% on the news after the close of regular US trading, and were up about 2.7% at 5:55 p.m. in New York.

The removal of the cap follows the termination of several consent orders against the bank just this year, sparking optimism that the restriction’s end was near. The Fed, noting the bank’s “substantial progress” in addressing its deficiencies, said other elements of the 2018 enforcement action will remain in place until the bank satisfies requirements for their termination.

“Removal of the asset cap represents successful remediation to the required standard based on focused management leadership, strong board oversight, and strict supervision holding the firm accountable,” Michael Barr, a Fed governor who resigned as vice chair for supervision earlier this year, said in a separate statement. “All three will need to continue for the firm to have a sustainable approach.”