Wells Fargo asset cap to remain in place, Fed chair says

Wells Fargo asset cap to remain in place, Fed chair says
© Greg Nash

Federal Reserve Chairman Jerome Powell on Wednesday said the asset cap that was placed on Wells Fargo in 2018 will remain in place for now.

Powell said the cap, which mandates that the bank keep its assets below $1.95 trillion, would remain in place until the company has fixed multiple problems, Reuters reported. He suggested that Wells Fargo still has a ways to go before this is achieved.

"We're not going to remove that asset cap until that's done," Powell said.

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According to Reuters, Powell said the Fed would continue to monitor Wells Fargo's progress and would not hesitate to issue new penalties.

In February 2018, the Federal Reserve board announced that it would be freezing Wells Fargo's growth and replacing four of its board members in light of a sales practice scandal in which the bank created millions of fraudulent checking and savings accounts for its customers without their consent.

The bank also charged customers for auto insurance products they didn't need and charged veterans hidden fees in order to refinance their mortgages. It ultimately agreed to pay hundreds of millions of dollars in order to resolve these claims.

These practices not only cost Wells Fargo customers millions of dollars, but many also lost their homes or vehicles.

Former Wells Fargo CEO Timothy Sloan said at the time of the Federal Reserve's decision that he expected the penalties to be lifted by the end of 2018.

"We expect to have this cap lifted because again, all of the activities that the Fed would like us to improve on are the same ones that we would like to improve on," he said three years ago. "And we believe it’s likely that the asset cap could get lifted by the end of the year."

Sloan resigned in 2019 as the company struggled to improve oversight on its business practices.

Earlier this month, Wells Fargo agreed to pay a $250 million fine when the Office of the Comptroller of the Currency said it had failed to improve its mortgage business and comply with the 2018 agreement.

The Hill has reached out to Wells Fargo for comment on Powell's remarks.