The Office of the Comptroller of the Currency has terminated a 2015 consent order against Wells Fargo related to its previously held financial subsidiaries, the company confirmed Thursday.
The latest termination is the 13th consent order closed by regulators since CEO Charlie Scharf took the helm of the bank in 2019 and the seventh since the start of this year.
Wells Fargo’s last remaining consent order – related to the $1.95 trillion asset cap put in place by the Federal Reserve in 2018 – followed a scandal in which the bank’s employees opened millions of fake customer accounts to meet sales targets.
Since the regulatory clampdown, Wells is now spending about $2 billion each year on its risk and control agenda and has streamlined its business while exiting some areas with lower returns. The San Francisco-based lender has introduced significant leadership changes, with 150 of its top 220 executives being new appointments, and has established a necessary risk-conscious framework throughout the company, Scharf said at a conference this week.
While Wells declined to comment beyond the press release on the prospect that the asset cap would be lifted, Scharf suggested Wednesday it could be lifted sooner rather than later.
“Our level of confidence in terms of where we are and how far we are down that road is extremely high,” he said. “We’re not done, but we’re a hell of a lot closer to the end than the beginning, at this point.”
Analysts have predicted the asset cap could be lifted soon, noting the pace of the resolution is a “key takeaway.”
The latest OCC consent order termination “substantiates both management’s increasingly confident tone regarding WFC’s regulatory ‘state of play’ and our own feeling that the asset cap could be lifted in the very near future,” analysts at Piper Sandler wrote in their research note.
Gerard Cassidy, analyst at RBC Capital Markets, noted the asset cap could be lifted as soon as this quarter, citing the pace of order terminations this year and Treasury Secretary Scott Bessent’s commentary regarding “loosening the regulatory ‘corset’ around the banking system.”
However, Sen. Elizabeth Warren, D-MA, has been vocal in opposing the removal of Wells' asset cap. In November, she urged the Fed to reject a plea by Wells Fargo to lift the asset cap based on a recommendation she claimed was purchased by Wells. Lifting the cap would “harm consumers, threaten our financial stability, and reward a bad bank for continuing a long history of abusive and reckless practices,” Warren wrote to Fed Chair Jerome Powell and then-Vice Chair for Supervision Michael Barr.
The OCC brought the 2015 consent order for Gramm-Leach-Bliley Act violations with issues concerning the consolidation and management of subsidiaries.
The latest termination comes almost a month after the Consumer Financial Protection Bureau lifted its 2018 consent order against Wells related to the bank’s compliance risk management program.
The 2015 consent order dissolution doesn’t free the lender from OCC scrutiny, as Wells has a formal agreement with the regulator, issued in September, related to the bank’s anti-money laundering efforts.
The agreement required Wells to enhance its AML and sanctions risk management practices, get the OCC’s acceptance of a program that assesses AML and sanctions risks of new offerings, and notify the regulator before expanding some of those offerings.
Wells has “been working to address a substantial portion of what’s required in the formal agreement, and we are committed to completing the work with the same sense of urgency as our other regulatory commitments,” the lender said in a statement in September.
