Wells Fargo Stock Rises as Fed Removes $1.95T Asset Cap After 7 Years

Core Insights - The Federal Reserve has lifted the $1.95 trillion asset cap on Wells Fargo, allowing the bank to pursue growth plans that were previously restricted due to a fake account scandal from 2018 [1][2][9] - Wells Fargo's CEO, Charlie Scharf, emphasized that this decision is a significant milestone in the bank's transformation journey [1] Group 1: Asset Cap Removal Details - The Federal Reserve determined that Wells Fargo has met all conditions required for the removal of the asset growth restriction [2] - The bank was mandated to improve its governance and risk management programs, which have now been reviewed and deemed satisfactory by the Federal Reserve [3] - Since 2019, Wells Fargo has resolved 13 consent orders, with seven resolved since the beginning of 2025 [4] Group 2: Benefits of Asset Cap Removal - The removal of the asset cap allows Wells Fargo to increase deposits, grow its loan portfolio, and expand its securities holdings, leading to a rise in net interest income [6] - The bank can now enhance its fee-generating activities, such as payment services and asset management, which will improve profitability [6][7] - The lifting of the cap is expected to significantly enhance Wells Fargo's financial performance and long-term strategic positioning [7] Group 3: Market Reaction - Following the announcement, Wells Fargo shares rose nearly 3%, reflecting improved investor sentiment regarding the bank's growth potential [1][9] - Over the past six months, Wells Fargo shares have gained 3.8%, slightly below the industry's growth of 4.8% [8]