Wells exits another consent order, leaving just the big one

Wells Fargo has been freed from yet another consent order, leaving just one remaining — the Federal Reserve’s historic 2018 cap on the bank’s assets at $1.95 trillion.

The San Francisco-based bank said Thursday in a press release that a seven-year-old consent order issued by the Office of the Comptroller of the Currency has been terminated. Regulators have freed Wells from seven such orders so far this year, and a total of 13 since 2019.

The remaining consent order with the Fed has been the most impactful on Wells, which has spent years trying to improve its regulatory compliance after a series of high-profile scandals. Because Wells has been shackled by the asset cap, which was regulators’ novel response to the scandals, it hasn’t been able to pursue meaningful growth for about seven years.

At least one analyst, Gerard Cassidy of RBC Capital Markets, continues to expect the asset cap to be terminated shortly. In a research note Thursday, Cassidy pointed not only to the bank’s recent progress with regulators, but also to Treasury Secretary Scott Bessent’s comments about wanting to loosen the “regulatory corset.”

Wells CEO Charlie Scharf, who joined the bank in 2019, spoke about the potential impact of the asset cap being removed during an industry conference Wednesday in New York. Scharf said that he and his team “feel very, very confident” the asset cap is going to be lifted.

Exiting the 2018 order would “lift the cloud that exists around Wells,” he said.

“We’ve been limited in the way we can think about what we can do, both because of this cap, but also the work that’s been required,” Scharf said. “I mean, we have been so inwardly focused to get this work done that when … the orders get lifted, including when the asset cap gets lifted, it does give us more bandwidth to … focus on growth.”

The 2015 consent order with the OCC had related to alleged violations of the part of the Gramm-Leach-Bliley Act that relates to the consolidation and management of subsidiaries. Wells was allegedly not compliant with a stipulation that “the national bank and each depository institutions affiliate of the national bank are well capitalized and well managed.”

The bank’s agreement with the OCC barred Wells from acquiring any new financial subsidiary.

The latest termination of a consent order comes about a month after Wells was freed from another 2018 order. That action by the Consumer Financial Protection Bureau stemmed from the bank’s alleged violations of consumer-lending rules in connection with a mandatory insurance program for auto loans, as well as in its processes for charging certain borrowers for mortgage interest rate-lock extensions. The bank agreed to pay a $1 billion penalty.

Cassidy said the latest termination is “positive” for Wells, demonstrating “progress …working with the company’s regulators to satisfy outstanding issues and reinforce the company’s risk and control framework.”

There has been some pushback on lifting the asset cap. In late 2024, Sen. Elizabeth Warren, D-Mass., said in a letter to Fed Chairman Jerome Powell that the cap should stay in place until the bank “can show that it can properly manage the risks associated with running a large bank.”

In April, the Committee for Better Banks, which is working to unionize Wells Fargo employees, said the Fed should evaluate the bank’s consumer complaint trends before lifting the asset cap.

Even if the asset cap is soon lifted, Wells won’t be entirely out of regulators’ crosshairs. In September, the OCC reached a formal agreement with Wells that flagged deficiencies in the bank’s anti-money-laundering compliance.

The OCC said it would require Wells to take “comprehensive corrective actions” to ensure that it’s reporting suspicious activity. The enforcement action did not include the announcement of a monetary penalty.