MW Wells Fargo clears one penalty, but its asset cap remains in place

By Steve Gelsi

Bank says its automobile- and mortgage-lending practices have now satisfied the requirements of a 2022 consent order set by federal regulators

Wells Fargo & Co. has satisfied the requirements of a consent order issued by the Consumer Financial Protection Bureau, its seventh resolution since 2019 of a consent order set by federal regulators, the bank said Tuesday.

In an announcement, the bank $(WFC)$ said that the consent order, which was issued in 2022, had been terminated.

The resolution of the consent orders in general sets the bank up for more growth, it noted on its quarterly call with Wall Street analysts on Jan. 15.

"We have to get out of these orders that we still have that do constrain us," the bank said on that call. "After several years of little to no growth as we focused on satisfying the requirements of our consent orders, we are starting to generate growth and increase customer engagement."

The bank managed to generate a return on average common equity of 13.4% in 2024, up from 13.1% in 2023. Its medium-term goal is 15%.

The CFTC's 2022 order stemmed from violations by the bank in its automobile- and mortgage-loan businesses, as well as its consumer deposit accounts.

In car lending, for example, the CFTC said Wells Fargo had "incorrectly applied loan payments, erroneously imposed certain fees and charges, incorrectly repossessed customers' vehicles, and failed to refund certain unearned fees on debt cancellation products."

While Wells Fargo has now cleared this consent order, a $1.95 trillion asset cap imposed on it in 2018 by the U.S. Federal Reserve continues to hang over the bank.

The cap was in response to alleged "widespread consumer abuses and other compliance breakdowns" by the bank, the Fed said at the time.

In its Jan. 15 call with analysts, Wells Fargo said it is assuming the asset cap will remain in place throughout the year.

In April, as it reported results for the first quarter of 2024, the bank said a consent order issued in 2016 by the Office of the Comptroller of the Currency - another federal regulator - had been lifted in the first quarter of 2024, noting that it was the sixth consent order to be lifted since Chief Executive Charlie Scharf joined the bank in 2019.

"The closure of this order was an important milestone and is confirmation that we operate much differently today," the bank said at that time.

-Steve Gelsi

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January 28, 2025 09:33 ET (14:33 GMT)

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