Investing.com -- Wells Fargo (NYSE:WFC) shares climbed 3% following the Federal Reserve’s announcement that the bank is no longer subject to the asset growth restriction from the Board’s 2018 enforcement action. The Fed’s decision marks a significant turnaround for the financial institution, which had been working to meet the regulatory demands imposed due to previous risk management deficiencies.
The Federal Reserve’s move to lift the growth restriction on Wells Fargo comes after a thorough review of the bank’s governance and risk management improvements. The bank was initially penalized in 2018 with an asset growth restriction as a result of failing to establish and maintain an adequate risk management framework, commensurate with its size and complexity. As part of the enforcement action, Wells Fargo was required to enhance its board of directors’ effectiveness, improve its compliance and operational risk management programs, and undergo an independent third-party review.
The Reserve Bank, with oversight from the Director of the Division of Supervision and Regulation, conducted numerous supervisory activities to assess Wells Fargo’s progress. The conclusion that Wells Fargo has complied with the conditions set forth in the 2018 Consent Order led to the removal of the growth restriction effective May 30, 2025. However, the Federal Reserve indicated that other provisions of the 2018 enforcement action will remain in effect until the bank satisfies the requirements for their termination.
This regulatory milestone reflects Wells Fargo’s substantial efforts in addressing the issues that led to the enforcement action. The lifting of the growth restriction is expected to allow Wells Fargo more freedom to expand its assets and pursue growth strategies that were previously constrained. The market’s positive response to the news underscores the significance of this development for the bank’s future operations and potential for increased investor confidence in its governance and risk management capabilities.