Pervasive and persistent misconduct.
Those were the words that then-Federal Reserve Chairwoman Janet Yellen aimed directly at Wells Fargo (WFC) on Feb. 2, 2018, in light of what the Fed called “widespread consumer abuses and other compliance breakdowns,” which included employees routinely opening fake accounts and credit cards.
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Clients noticed the fraud after being charged unanticipated fees and receiving unexpected credit or debit cards or lines of credit.
Initial reports blamed individual Wells Fargo branch workers and managers for the problem, as well as sales incentives associated with selling multiple solutions or financial products.
Blame was later shifted to top-down pressure from higher-level management to open as many accounts as possible through cross-selling, which is a bank associate attempting to sell a current customer additional financial products.
In response, the Fed restricted the bank’s total asset size until it sufficiently improved its governance and controls.
Wells Fargo CEO: Investing in the company’s future
Wells Fargo, founded in 1852 in response to the California Gold Rush, was required to improve its governance and risk-management program and to complete a third-party review of these improvements.
“We cannot tolerate pervasive and persistent misconduct at any bank, and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” Yellen said in a statement.
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The fake-accounts scandal reportedly continued to cause legal, financial and reputational headaches for Wells Fargo and former bank executives as recently as September 2023.
But that came to an end on June 3, 2025, when the Fed said Wells Fargo was no longer subject to the asset-growth restriction from the central bank's 2018 action, removing the roughly $1.95 trillion cap on the bank’s assets.
Other provisions in the 2018 enforcement action will remain in place until the bank satisfies the requirements to end them, the Fed said.
Chief Executive Charlie Scharf said the Fed’s decision “marks a pivotal milestone in our journey to transform Wells Fargo.
“We have been methodically investing in the company’s future while improving our financial results and profile.”
Scharf praised Wells Fargo employees and said all full-time workers will receive a $2,000 award.
Analyst looks to long-term revenue growth
“This is why we have been long Wells Fargo all this time,” said TheStreet Pro's Stephen Guilfoyle.
Scharf, “whom your author is a fan of, took the job in 2019 with the stated mission of resolving the bank's regulatory issues and cleaning up its reputation,” the veteran trader said. “Mission accomplished, Charlie. Nice job.”
Earlier this year Wells Fargo was ranked as the third largest U.S. bank by assets at $1.71 trillion, coming in behind JP Morgan Chase (JPM) and Bank of America (BAC) .
In April, Wells Fargo posted lower-than-expected quarterly revenue and a decline in net interest income.
Scharf said the bank expected “continued volatility and uncertainty” and is “prepared for a slower economic environment in 2025, but the actual outcome will be dependent on the results and timing of the policy changes.”
Wells Fargo's stock is up 8.2% in 2025 and has climbed nearly 30% from a year ago. The stock closed June 4 regular trading at $75.38, off 0.4%.
Several investment firms issued research reports on Wells Fargo after the Fed decision.
TD Cowen said that it did not “dispute that this is good news for Wells” but that much of the optimism around the lifting of the asset cap has already been priced into the stock, according to The Fly.
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The investment firm, which has a hold rating and $83 price target on Wells Fargo shares, said it expected “a modest positive reaction to the news” but was “far more excited on what this action could mean to longer-term revenue growth.”
Bank of America analyst Ebrahim Poonawala raised the investment firm's price target on Wells Fargo to $90 from $83 and affirmed a buy rating.
Removal of the asset cap is a catalyst, both fundamentally and for stock valuation, Poonawala said. He does not think investors should “sell the news”; rather, he said that the focus should now shift to management's ability to deliver high-teens percent return on tangible common equity.
And Evercore ISI raised its price target on Wells Fargo to $88 from $72 and maintained an outperform rating.
The near-term benefit to the shares is likely a modest positive given that the removal of the asset cap was widely expected.
But the firm remains “particularly constructive on the longer-term outlook” for WFC shares, as it expects investors to shift their focus to the removal's implications for earnings going forward.
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