By Ken Sweet
NEW YORK (AP) — The Federal Reserve said Tuesday that Wells Fargo is no longer subject to the harsh suppression the Fed put on banks in 2018 due to its toxic sales and banking culture.
It was a victory for Wells Fargo, and it has spent nearly a decade trying to convince the public and policymakers that it changed the way it was.
“We are a much stronger company today because of the work we did,” Wells Fargo CEO Charlie Scharf said in a statement. Scharf also announced that each of Wells Fargo’s 215,000 employees will be awarded a $2,000 award for turning the bank around.
Wells Fargo once had a corporate culture and had set unreasonable sales goals for branch employees, so employees opened millions of fake accounts to achieve those goals. Wells’ top executives called branches “stores,” and employees were expected to sell their customers to as many bank products as possible, even if they didn’t want or need them.
After a 2016 investigation by the Los Angeles Times, Wells Fargo closed its sales culture and fired many of its leadership and board of directors. The fake account scandal cost Wells Fargo’s Fargo fines and fines that permanently hurt its reputation, especially as the scandal defeated years after the Great Recession and the financial crisis. It was later revealed that Wells Fargo opened about 3.5 million accounts it doesn’t want or need.
Wells Fargo, once considered the best running bank in the country, has now been the child of the worst banking practices for decades.
To push Wells to fix themselves, the Federal Reserve took the extraordinary step of placing Wells Fargo in a program where banks cannot grow in more than 2018. Previously, no banks were placed in such a program known as asset caps. The Fed has called for the IT culture to be revised and its entire risk and compliance department to redo its entire risk and compliance department.
Since taking over in 2019, Schaff’s goal has been to convince the Federal Reserve that Wells Fargo has revised its toxic banking operations. Once the asset cap is removed, banks can undertake additional investment banking operations by pursuing more deposits, new accounts and holding additional securities in Balance Shett.
Original issue: June 3, 2025, 6:23pm EDT
