Fed terminates enforcement action imposed on Wells Fargo due to fake accounts scandal

By Pete Schroeder

WASHINGTON, March ‌5 (Reuters) - The ​U.S. ​Federal Reserve announced on Thursday it had terminated the enforcement action it imposed on Wells Fargo following ‌the bank's widespread fake accounts scandal, saying the bank ⁠had sufficiently overhauled its operations.

The central bank said it was lifting the ‌action after nearly a decade ‌of remediation work by the bank. The 2018 action included the unprecedented asset cap on the bank's growth, which ​was lifted in 2025.

The bank had no statement on the Fed's action beyond acknowledging its removal.

Lifting the asset cap ⁠was a major boon for the bank, which had been restricted in its growth ​for seven years as a result of the Fed's penalty, which was the first of its kind ​imposed by the central bank.

"The market ‌has largely moved on from WFC's regulatory issues, especially since the asset cap was lifted last ⁠year," said R. Scott Siefers, a banking analyst at Piper Sandler, in a note.

"But the termination still represents an important psychological victory ⁠in that it was this order that first installed the asset cap. ​Thus, even if the stock doesn’t react, this is great to have in the rear view."

Shares of Wells Fargo were down 2.7% in afternoon ‌trade amid broader weakness in financial stocks.

Thursday's relief now marks the final removal of any additional ‌regulatory scrutiny imposed on the bank following its far-ranging sales ⁠practices scandal, which saw employees ‌create millions of unauthorized ​accounts for customers.

(Reporting by Pete Schroeder; additional reporting by Saeed Azhar; Editing by Mark Porter and Nick ‌Zieminski)

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