Wells Fargo Unshackled After ‘Widespread Consumer Abuses’ Discovered

Federal regulators have let Wells Fargo off the leash that the bank had been on for seven years after it became embroiled in a scandal over fake customer accounts.

The Federal Reserve Board of Governors on Tuesday ended a restriction that capped the bank’s assets at about $2 trillion, according to the Wall Street Journal.

Wells Fargo, the nation’s fourth-largest bank, had been punished in 2018 after a scandal in which it was revealed that bank employees had opened millions of accounts without any authorization from customers.

The order imposing the limit said  “widespread consumer abuses and compliance breakdowns” were the reason for the restrictions.

Other parts of the order “will remain in place until the bank satisfies the requirements for their termination,” the Fed said.

The asset-cap removal “reflects the substantial progress the bank has made in addressing its deficiencies.”

The bank now has the green light to expand in areas it has identified, such as credit cards, wealth management, and commercial banking, according to Reuters.

“It will be a significant bump for the stock in the near term and also paves the way for long-term growth as they don’t have to manage their business around the asset cap now,” Brian Mulberry, client portfolio manager at Zacks Investment Management, said.

“This marks the end of a painful period for Wells Fargo, and also serves as a reminder for financial institutions to be sure customer interests are always aligned with growth goals,” Stephen Biggar, a banking analyst at Argus Research in New York, said.

The bank’s internal governance and risk management have evolved, the Fed said, according to The New York Times.

Ending the restriction was due to the bank’s “focused management leadership, strong board oversight and strict supervision,” Michael S. Barr, a Fed governor who oversaw supervision of banks, said.

The improvements “will need to continue for the firm to have a sustainable approach,” he said.

Wells Fargo CEO goes from fixer to builder as regulators lift punishments | The ghost of Norwest has left the bldg | https://t.co/8C7SrSH2MF @LananhTNguyen $WFC

— Richard Christopher Whalen (@rcwhalen) June 4, 2025

Bank CEO Charles Scharf called lifting the cap “a pivotal milestone” for the company.

“We are a different and far stronger company today because of the work we’ve done,” he said.

“No one thought it would last this long,” Ian Katz, an analyst at Capital Alpha Partners, said of the cap on assets.

The removal “signals both the bank’s progress and the Fed’s increasingly bank-friendly mood,” Katz said.

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