Federal Reserve urged not to raise Wells Fargo's asset limit by Senator Elizabeth Warren
In a significant move, the Federal Reserve lifted the asset cap on Wells Fargo in June 2025, allowing the bank to grow its assets beyond the $2 trillion mark. This cap had been in place since 2018, following the bank's 2016 fake-accounts scandal [1][3].
With the asset cap removed, Wells Fargo is now focusing on growth, aiming to improve its deposits and revenue streams [1][3]. The bank's management views this as a major turning point, shifting focus from regulatory issues to driving growth and shareholder returns, including aggressive share buybacks and dividend hikes.
However, Senator Elizabeth Warren, a long-standing critic of large banks, has not expressed support for the asset cap removal. Her record indicates a preference for stricter controls on large financial institutions to protect consumers [1][2][3][4]. In a recent letter to Federal Reserve officials, Senator Warren urged them to reject Wells Fargo's plea to lift the asset cap [5].
Senator Warren's letter came in response to two recent issues involving Wells Fargo. The first was an order from the Office of the Comptroller of the Currency (OCC) in September, which cited deficiencies in the bank's financial crimes risk management practices and anti-money laundering internal controls [6]. The second was a ruling that allowed a lawsuit over the bank's diverse-interview policy to proceed [7].
Warren also pointed out five AML violations against Wells Fargo in the past 10 years and added a list of missteps since the 2016 scandal, including mortgage overcharges, wrongful foreclosures, vehicle repossessions, sanctions violations, document falsification, and excessive overdraft fees [6].
Senator Warren has also urged the OCC's acting chief, Michael Hsu, to impose a growth restriction on Citigroup due to insufficient progress on resolving ongoing data quality, risk management, and internal control issues [8].
Wells Fargo submitted a third-party review of changes to its risk management and controls for the central bank to analyze, as reported by Bloomberg in September [9]. Spokespeople for Wells Fargo and the Fed declined to comment on Senator Warren's letter.
As the next ranking member of the Senate Banking Committee, Senator Warren is likely to play a significant role in shaping the future of banking regulation. Her stance on asset caps suggests a preference for more stringent measures to ensure the safety and fairness of the financial system.
References:
- Wells Fargo's Asset Cap Lifted by Fed
- Warren's Critique of Wells Fargo's Asset Cap Removal
- Wells Fargo's Growth Plans after Asset Cap Lift
- Warren's Long-standing Stance on Banking Regulation
- Warren's Letter to Federal Reserve Officials
- Warren's Critique of Wells Fargo's AML Violations
- Lawsuit over Wells Fargo's Diverse-Interview Policy
- Warren's Call for Growth Restriction on Citigroup
- Wells Fargo's Third-Party Review of Risk Management
Finance experts and general-news outlets are closely watching the ongoing dispute between Senator Elizabeth Warren and the Federal Reserve over the asset cap removal for Wells Fargo, a move that has sparked criticism from Warren due to lingering concerns about the bank's compliance with anti-money laundering regulations and other issues. Business trends indicate that Wells Fargo is focusing on growth following the asset cap lift, but politics may play a significant role in shaping the bank's future, with Senator Warren advocating for stricter controls on large financial institutions to protect consumers.
