Wells Fargo Released from Fed’s $1.95 Trillion Asset Cap Post-Scandal Milestone

In a pivotal regulatory development, the Federal Reserve has lifted its asset cap on Wells Fargo & Company (WFC), freeing the banking giant from a critical constraint imposed in the aftermath of its infamous fake accounts scandal nearly a decade ago. The restriction, which capped Wells Fargo’s assets at $1.95 trillion, had been in place since 2018, hindering the bank’s growth ambitions and strategic competitiveness. The Fed cited “substantial progress” in remediating past deficiencies as the reason for its decision, although other aspects of the 2018 consent order remain in effect.

Highlights:

• $1.95 trillion asset cap, in place since 2018, officially lifted.

• Fed acknowledges Wells Fargo’s “substantial progress” on compliance.

• Other regulatory restrictions, including OCC consent orders, still apply.

• Shares surged 4% in after-hours trading post-announcement.

Strategic Win for CEO Charles Scharf as Turnaround Progress Gains Credibility

The removal of the cap is a clear win for CEO Charles Scharf, who took the reins in 2019 pledging to resolve the bank’s regulatory entanglements. Since then, Scharf has overseen the termination of 13 consent orders, including seven in 2025 alone. In a statement, Scharf noted that Wells Fargo is now a “far stronger company”, ready to advance its growth strategy with improved processes, governance, and culture. Despite the symbolic significance of the asset cap removal, the leadership team has been measured about immediate financial implications, warning investors not to expect a “light switch” change in performance.

Highlights:

• Scharf’s leadership has resulted in the removal of 13 consent orders.

• CEO emphasizes cultural transformation and internal process reform.

• CFO warns investors not to expect immediate earnings boost.

• Strategic goal now shifts toward investment banking expansion.

Wells Fargo Eyes Expansion into Investment Banking After Regulatory Relief

With the shackles now loosened, Wells Fargo is positioned to compete more aggressively in investment banking, an area where it lags behind peers such as Goldman Sachs, JPMorgan Chase, and Morgan Stanley. The lifting of the asset cap enables more flexibility in balance sheet deployment, particularly in trading, underwriting, and advisory services. Analysts expect the move to fuel Wells Fargo’s pivot into higher-yield businesses, provided it continues to improve on compliance and operational risk management, which remain under scrutiny.

Highlights:

• Lifting cap frees balance sheet for investment banking activities.

• Bank aims to close gap with Wall Street giants in capital markets.

• Analysts expect strategic shift toward higher-margin business lines.

• Execution risk remains given residual regulatory oversight.

Regulatory Watchdogs to Maintain Oversight Amid Ongoing Consent Orders

Despite the breakthrough, Wells Fargo’s regulatory obligations are far from over. It still faces enforcement actions from the Office of the Comptroller of the Currency (OCC) related to anti-money laundering lapses and violations of the Gramm-Leach-Bliley Act. The Fed’s own 2018 consent order remains partially in place. Former Fed Governor Michael Barr, in one of his final statements before departing his regulatory role, underscored that Wells Fargo would remain under close watch, reinforcing the expectation of strict ongoing supervision to ensure continued progress.

Highlights:

• OCC agreements over AML controls and data privacy remain active.

• Fed’s 2018 consent order still partially in effect.

• Regulators to maintain enhanced scrutiny of internal controls.

• Wells Fargo must demonstrate sustained compliance to avoid further penalties.