Federal authorities have ended two consent agreements with Wells Fargo Bank.
In a significant move, Wells Fargo has lifted the asset cap that was imposed on the bank by the Federal Reserve in 2018. This milestone, achieved in the second quarter of 2025, marks the end of a restrictive period for the bank and paves the way for more aggressive growth and expansion of services.
Since 2019, Wells Fargo has terminated thirteen consent orders, with seven of them being terminated in 2023 alone. The lifting of the asset cap and the termination of these orders signify a pivotal moment for the bank, as it can now focus on growth, reinvestment, and returns for shareholders, including stock repurchases and dividend increases.
As of mid-2025, there is no known remaining material consent order or regulatory asset cap for Wells Fargo. This regulatory relief indicates confidence in the bank’s improved risk management and governance frameworks.
The journey to this point began in 2011 when Wells Fargo, along with nine other institutions, was accused of a pattern of misconduct and negligence within their residential mortgage loan servicing and foreclosure processing businesses. Since then, the bank has been under several consent orders, but many of these have been terminated or resolved.
However, Wells Fargo is still subject to five consent orders. Notably, two consent orders that the bank had been under since 2011 were terminated recently. One of these orders concerned the bank's legacy mortgage servicing activities, an issue that analysts at RBC Capital Markets predict could be lifted in 2025, potentially in the first half of the year.
The second terminated consent order alleged that Wells steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications. This order pertained to the bank's Wells Fargo Financial business.
CEO Charlie Scharf has stated that the terminations of these orders are an important sign of progress in resolving historical matters. The bank's board of directors has credited Scharf's leadership for making "significant progress" in strengthening Wells' risk and control infrastructure.
In a securities filing last week, the bank's board of directors disclosed that Scharf's pay increased to $31.2 million in 2024. Despite this, there was no mention of any plans to purchase licensing rights or any specific achievements in the retail sector in the filing.
The Federal Reserve's 2018 action established a $1.95 trillion asset cap for Wells Fargo, which has cost the bank $36 billion in profits according to a Bloomberg report from Monday. The removal of this cap and the terminated consent orders paint a clear picture of regulatory relief and future growth potential after years of regulatory constraints tied to past compliance issues.
In the context of the bank's reconciliation with regulatory bodies, the termination of the second consent order pertaining to Wells Fargo Financial business, which alleged steering of prime borrowers into costlier loans and falsification of income information, signals a step towards addressing historical matters. The lifting of the asset cap by the Federal Reserve, previously imposed in 2018, opens up avenues for more vigorous growth and expansion in the banking-and-insurance industry, finance, and business sectors. With no known remaining material consent order or regulatory asset cap as of mid-2025, the industry anticipates a promising future for Wells Fargo, as the bank focuses on reinvestment and returns for shareholders.
