U.S. bank Wells Fargo & Co. (WFC) has cleared an important regulatory hurdle in its efforts to have the $1.95 trillion asset cap imposed on it removed.
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The San Francisco-based lender has satisfied the requirements of a consent order issued by the Consumer Financial Protection Bureau that was first issued in 2022. As a result, the consent order has been terminated, moving Wells Fargo a step closer to having the asset cap imposed on it lifted.
Wells Fargo was slapped with numerous consent orders, which are essentially a form of regulatory oversight, for charging unwarranted fees on customers of its automobile and mortgage loan businesses. The bank, one of the largest in the U.S., had the $1.95 trillion asset cap imposed on it in 2018 by the U.S. Federal Reserve in response to widespread consumer abuses that included opening fake bank accounts.
The asset cap limits how big Wells Fargo can get. Rival bank JPMorgan Chase (JPM) has assets under administration of more than $3.5 trillion.
Regulatory Oversight
In its recent Jan. 15 earnings call with analysts and media, Wells Fargo said that it is assuming the current asset cap will remain in place throughout 2025, but that it will be removed in due course once the bank satisfies all the regulatory conditions imposed on it for past abuses.
However, Wells Fargo might not be out of the woods yet. Last month, a fresh lawsuit filed by the Consumer Financial Protection Bureau accuses Wells Fargo of “allowing fraud to fester” on the Zelle payments platform owned by a consortium of banks. WFC stock has risen 57% in the last 12 months.
Is WFC Stock a Buy?
The stock of Wells Fargo has a consensus Moderate Buy rating among 19 Wall Street analysts. That rating is based on 10 Buy and nine Hold recommendations issued in the last three months. The average WFC price target of $82.94 implies 5.80% upside from current levels.
