How Close Is Wells Fargo to Exiting Its Asset Cap?

With Wells Fargo's (NYSE: WFC) stock up about 32% this year and its first-quarter earnings report coming Wednesday morning, it's a good time to revisit the asset cap the bank is operating under, which is easily the biggest obstacle standing in its way.

Following Wells Fargo's phony-accounts scandal, the Federal Reserve in 2018 implemented a consent order that prevents Wells Fargo from growing its balance sheet above $1.95 trillion in assets. The order is easily one of the costliest punishments ever put on a bank. But after more than three years, the bank seems to be making some progress on the order, and an end to the asset cap could be within reach. Let's take a look at where Wells Fargo stands going into its earnings report and how close it could be to exiting the asset cap.

This whole situation really began in 2016 when the Consumer Financial Protection Bureau revealed that Wells Fargo had been opening millions of deposit and credit card accounts on behalf of its customers without their authorization. Needless to say, regulators were not happy. Wells Fargo was subject to numerous lawsuits and eventually agreed to pay a $3 billion fine as well. The Federal Reserve also prohibited the bank from exceeding $1.95 trillion in assets until it could fix its regulatory infrastructure and internal controls that led to the phony-accounts scandal.

Source Fool.com