Wells Fargo wins Fed acceptance for overhaul plan tied to asset cap: Bloomberg News
11:43 am Wednesday, February 17th, 2021
(Reuters) – Fed officials have privately signaled to Wells Fargo & Co that they have accepted its proposal for overhauling risk management and governance, Bloomberg News reported https://bit.ly/37nGqHq on Wednesday, citing people with knowledge of the matter.
Shares in the lender jumped 6% on Wednesday. The bank declined a Reuters request for comment.
The approval is a key step in getting a regulatory asset cap lifted, which has hindered Wells Fargo’s growth since 2018.
Wells Fargo has been in regulators’ penalty box since 2016 when details of a sales scandal first emerged, leading to the departure of two chief executives, billions of dollars in litigation and remedial costs and the U.S. Federal capping its balance sheet at $1.95 trillion.
A Federal Reserve spokesman declined to comment. But the original enforcement action adopted in 2018 lays out the lengthy process the bank must undertake to be relieved of the cap, including overhauling its board effectiveness and risk management.
Under the public order, the Fed must sign off on any plan to address shortcomings at the bank and verify its implementation. After that, an independent third party must come in and review the plan and its implementation. Only then would the Fed board consider voting to lift the asset cap.
Last month, Chief Financial Officer Mike Santomassimo said the bank was making progress on getting the asset cap removed but it still had “a significant amount of work to do”.
(Reporting by Noor Zainab Hussain in Bengaluru, Imani Moise in New York and Pete Schroeder in Washington; Editing by Ramakrishnan M.)
