Wells Fargo shares leap after the Fed reportedly permitted the financial institution's overhaul plan
A pedestrian wearing a protective mask walks past a Wells Fargo & Co. bank branch in New York, United States, on Thursday, July 9, 2020.
Peter Foley | Bloomberg | Getty Images
Wells Fargo stock fell more than 4% on Wednesday after the Federal Reserve reportedly signaled it would accept the bank's plan to overhaul its governance functions. This is an important step in freeing the malicious company from regulatory restriction.
The Fed has privately announced that it will accept the bank's proposal, reported Bloomberg News. This would bring Wells closer to lifting the limits of his assets. Wells' assets under management have been capped since February 2018.
However, there are still a few steps left before the sentence is lifted. Wells Fargo – led by CEO Charlie Scharf since October 2019 – must execute its plan at the Fed's discretion and then have its controls approved by an outside party before the central bank votes to lift the cap.
Wells Fargo is limited to a balance sheet size of $ 1.95 trillion at the end of 2017, a rare penalty in the banking world imposed by the Fed following the company's multitude of internal controls scandals.
This asset cap was a major reason Wells left competitors like JPMorgan Chase and Bank of America behind, who were better able to take advantage of opportunities during the pandemic.
A bank spokesman declined to comment specifically on the news, referring reporters to a statement it had made in the past:
"The Federal Reserve will determine when the work to meet the informed consent requirements will be carried out to your satisfaction," the bank said. "We are focused on getting the job done. We have high levels of liquidity and capital, and we use our financial resources to help the US economy and our clients meet the asset cap."