Wells Fargo Advances in Resolving Regulatory Issues with Key Consent Order Lifted

Wells Fargo has successfully cleared its twelfth consent order since 2019, marking significant strides in rectifying persistent regulatory concerns. These issues had previously subjected the bank to an asset cap of $1.95 trillion.

The Consumer Financial Protection Bureau (CFPB), the primary U.S. consumer protection agency, rescinded a 2018 consent order pertaining to the lender’s risk management practices, as announced by Wells Fargo on Monday.

A parallel consent order, initially established with the Office of the Comptroller of the Currency (OCC), another leading regulatory body, was terminated back in February.

According to Wells CEO Charlie Scharf, “The conclusion of this order, along with the recent resolution of other consent orders, underscores the substantial progress we’ve made in establishing a robust risk and control infrastructure.”

The company’s stock value experienced a rise of almost 1%, reaching $70.29.

Consent orders represent enforcement measures that involve either monetary penalties or specific directives designed to address a particular problem.

Wells Fargo reports a 20% increase in its technology banking team over the past year.

Wells Fargo’s regulatory challenges gained prominence following a scandal involving the creation of fraudulent accounts, which surfaced in 2016. This triggered rigorous examinations and resulted in billions of dollars in imposed fines.

Since 2018, the bank has been operating under an asset cap imposed by the U.S. Federal Reserve. This restriction, considered one of the most stringent penalties available to regulators, prevents the expansion of its balance sheet beyond $1.95 trillion until the identified deficiencies are fully addressed.

RBC Capital Markets analyst Gerard Cassidy suggests that the asset cap could potentially be removed as early as the second quarter, citing the advancement made this year and the U.S. government’s inclination towards more lenient banking regulations.

Recent endeavors to restore compliance have fostered heightened optimism among investors. The institution has successfully resolved six consent orders in the current year, with two others still pending.

Analysts at Piper Sandler commented, “With both the OCC and the CFPB seemingly satisfied with Wells Fargo’s risk management practices, we interpret this positive development as a favorable indicator of progress.”