Wells Fargo shares soar after the Fed reportedly approves 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 shares burst Wednesday after the Federal Reserve reportedly signaled it would accept the company’s plan to overhaul its governance functions. This is an important step in the bank’s efforts to be exempt from any regulatory restriction.
Wells Fargo rose 5.7% in retail.
The Fed has privately signaled that it would accept the bank’s proposal, reported Bloomberg, which removes a hurdle in removing an asset cap imposed on the bank in 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 implement its plan at the discretion of the Fed and then have its controls approved by an outside party before the Fed for the repeal will vote 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 bank’s multitude of internal controls scandals.
This asset cap was a major reason Wells Fargo 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 they 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 strength to help the US economy and our clients meet the asset cap.”