Wells Fargo Says CFPB’s 2022 Consent Order Terminated

By Manya Saini, Niket Nishant and Nupur Anand

(Reuters) -Wells Fargo said on Tuesday a U.S. regulator has terminated a 2022 punishment, bringing it a step closer to having the $1.95 trillion asset cap imposed on the bank removed.

The consent order imposed by the U.S. Consumer Financial Protection Bureau in 2022 was tied to automobile lending, consumer deposit accounts and mortgage lending practices at the bank.

Analysts said it marks another win for CEO Charles Scharf, who was appointed as the bank’s top boss in 2019 and was tasked with fixing its longstanding regulatory issues. It is the seventh consent order closed by Wells Fargo’s regulators since 2019.

“We view this news as a positive for Wells Fargo as it demonstrates progress of working with the company’s regulators,” RBC Capital Markets analyst Gerard Cassidy wrote in a note, adding the brokerage expects the Fed’s asset cap to be lifted in the first half of 2025.

The asset cap imposed in 2018 prevents it from growing until regulators deem it has fixed problems dating back to the 2016 fake-accounts scandal. Regulators mandated additional oversight of the lender in the wake of the turmoil.

A consent order is a formal, public enforcement action between a regulator and a bank, which often comes with a fine and directives to address an issue in a timely fashion.

PROGRESS IN REGULATORY FIXES

“While it is yet to be seen if the new regulatory regime lifts the asset cap this year or not, these developments bring it a step closer,” said Chris Marinac, director of research at Janney Montgomery Scott.

The asset cap is seen as one of the toughest punishments U.S. regulators can put in place, and its removal requires a vote by the Fed’s board of governors.

Last year, Reuters, citing sources, reported the bank was in the last stages of a process to pass regulatory tests to lift the asset cap in 2025, after fixing the problems from its fake-accounts scandal.