Ending of Asset Cap for Wells Fargo could be imminent, according to Scharf's assurance
In a significant development, Wells Fargo, one of the largest banks in the United States, has been released from the asset cap that has restricted its growth for the past seven years. The Federal Reserve lifted the cap in June 2025, recognising the bank's significant progress in improving governance, risk management, and operational controls.
The asset cap, imposed in 2018, was a part of a broader enforcement action addressing failures in consumer practices and internal controls, following the 2016 fake accounts scandal. The cap restricted Wells Fargo from growing larger than the $1.95 trillion asset size it held at that time.
Under the terms of the consent order, Wells Fargo was required to develop and implement plans to prevent further consumer harm, improve governance and risk management programs, and complete independent third-party reviews of these improvements. The bank has made substantial progress in these areas, leading to the lifting of the cap.
However, other provisions of the 2018 consent order remain in place until fully satisfied. The bank continues to be required to maintain and improve its risk management program, undergo ongoing oversight and assessments by regulators and independent third parties, and ensure that governance weaknesses and compliance issues that led to the earlier violations are fully remedied.
Wells Fargo CEO Charlie Scharf described the removal of the asset cap as a "pivotal milestone" in the bank’s transformation journey. The bank has rewarded full-time employees with $2,000 awards in recognition of their contributions to progress.
The bank is now expected to pursue measured growth while maintaining a focus on risk and governance to avoid repeating past mistakes. The focus will be on retail deposits, wealth management, and investment banking, with each segment of the bank - consumer and small-business banking, consumer lending, wealth management, commercial banking, and corporate and investment banking - aiming to grow faster and have higher returns.
Wells Fargo is also focusing on improving its branch experience and bolstering digital capabilities. The bank is spending about $2 billion annually on its risk and control agenda. Significantly more is being spent on marketing by the bank.
Scharf has raised questions about the growth of private credit, which has ballooned to a $1.6 trillion industry. He believes that regulators need to look at what is driving this growth. Scharf has also noted that the asset cap wasn't a constraint on loan growth, because the demand isn't there and hasn't been for several years.
The bank has simplified its business by exiting some areas with lower returns or lackluster growth rates. Scharf has brought in 150 of the bank's top 220 people as fresh faces.
Wells Fargo is now subject to two remaining consent orders from federal regulators. These orders will continue to require ongoing improvements and regulatory oversight until they are fully satisfied. Despite these challenges, the bank is optimistic about its future and its ability to serve its customers effectively and responsibly.
[1] Federal Reserve Press Release, June 25, 2025: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250625a.htm [3] Wells Fargo Press Release, June 25, 2025: https://www.wellsfargo.com/about/news/press-releases/2025/06/25/asset-cap-lifted [5] Consent Order, Federal Reserve, 2018: https://www.federalreserve.gov/supervisionreg/consentorders/2018-101-1.pdf
The asset cap, a consequence of the 2018 consent order following Wells Fargo's involvement in the fake accounts scandal, restricted the bank's growth in the banking-and-insurance industry. Now that the cap has been lifted, Wells Fargo aims to focus on growing its business in areas such as retail deposits, wealth management, and investment banking.
Two major provisions of the 2018 consent order continue to require Wells Fargo to maintain and improve its risk management program and to ensure that governance weaknesses and compliance issues are fully remedied, as the bank moves forward in the finance sector.
