A pedestrian wearing a protective mask walks past a Wells Fargo & Co. bank branch in New York, U.S., Thursday, July 9, 2020.
Peter Foley | Bloomberg | fake images
Shares in Wells Fargo soared Wednesday after the Federal Reserve reportedly said it will accept the firm’s plan to review its governance functions, a key step in getting the bank free of a regulatory tightening.
Wells Fargo was up 5.7% in trading.
The Fed has privately signaled that it would accept the bank’s proposal, Bloomberg reported, removing an obstacle to finally removing an asset limit imposed on the bank in February 2018.
However, there are several steps left before the sanction is lifted: Wells Fargo, led by CEO Charlie Scharf since October 2019, has to implement its plan to suit the Fed and then obtain approval of its controls from a outside before the Fed votes to lift the lid.
Wells Fargo is limited to the size of its balance sheet at the end of 2017, at $ 1.95 trillion, a rare fine in the banking world enacted by the Fed after the bank’s multitude of scandals linked to internal controls.
That asset cap has been a key reason Wells Fargo has underperformed its rivals, including JPMorgan Chase and Bank of America, which have been better able to take advantage of opportunities during the pandemic.
A spokesperson for the bank declined to comment specifically on the news, referring reporters to a statement he has made in the past:
“The Federal Reserve will determine when work to comply with the consent order requirements will be done to its satisfaction,” the bank said. “We are focused on getting the job done. We maintain strong levels of liquidity and capital, and we are committed to using our financial strength to help support the US economy and our clients while operating within the asset cap.”