Wells Fargo shares soar after Fed reportedly approves financial institution’s overhaul plan

A pedestrian wearing a protective mask walks past a Wells Fargo & Co. bank branch in New York, United States, on Thursday, July 9, 2020.

Peter Foley | Bloomberg | Getty Images

Wells Fargo’s shares burst Wednesday after the Federal Reserve reportedly signaled it would accept the company’s plan to overhaul its governance functions. This is an important step in the bank’s efforts to be exempt from any regulatory restriction.

Wells Fargo rose 4.8% in retail.

The Fed has privately signaled that it would accept the bank’s proposal, Bloomberg reported Wednesday, which removes a hurdle in lifting an asset cap imposed on the bank in February 2018. However, according to Bloomberg, there are still a few steps left before the sentence is lifted.

Wells Fargo is limited to a balance sheet size of $ 1.95 trillion at the end of 2017, a rare penalty in the banking world imposed by the Fed after the bank’s multitude of internal controls scandals.

This asset cap was a major reason Wells Fargo, under its current CEO Charlie Scharf, lagged behind its competitors, who were better able to take advantage of the opportunities during the pandemic.

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