Wells Fargo's Journey to Redemption: CFPB Consent Order Closed

Wells Fargo & Co. (WFC) has announced that the Consumer Financial Protection Bureau (CFPB) has terminated its 2022 consent order, marking a significant step in the bank's ongoing efforts to address its past regulatory issues and regain investor confidence. The closure of the consent order, which was related to automobile lending, consumer deposit accounts, and mortgage lending, is a positive development for Wells Fargo, as it demonstrates the bank's commitment to improving its compliance framework and addressing regulatory concerns.



The termination of the CFPB consent order is the seventh such order closed by Wells Fargo's regulators since 2019, indicating a consistent effort to resolve past regulatory issues. This progress may improve investor confidence and potentially lead to a more favorable market perception of the company. However, it is essential to note that seven public consent orders remain outstanding for the bank, suggesting that there is still more work to be done to fully address its past misconduct.



Wells Fargo's CEO, Charles Scharf, has expressed confidence in the bank's progress to fix compliance problems, detailing its efforts to implement risk controls and track its progress at the operating committee every single week. The bank is in the last stages of a process to pass regulatory tests to lift the $1.95 trillion asset cap next year, after fixing problems from its fake-accounts scandal. The asset cap, imposed by the Federal Reserve in 2018, prevents Wells Fargo from growing until regulators deem it has fixed its problems.

The closure of the CFPB consent order is a positive development for Wells Fargo, as it brings the bank a step closer to having the asset cap removed. The lifting of the asset cap could provide another major lift for the bank's share price, as it would allow Wells Fargo to grow and expand its business. However, it is crucial for the bank to continue addressing its remaining regulatory hurdles and maintaining a strong focus on operational risk and compliance to sustain this momentum and avoid any potential setbacks that could affect its market standing.

In conclusion, the closure of the CFPB consent order is a significant milestone for Wells Fargo in its ongoing efforts to address its past regulatory issues and regain investor confidence. While the bank still faces remaining consent orders and the Federal Reserve's asset cap, the progress it has made in closing consent orders, including the CFPB order, is a positive step forward. Wells Fargo must continue to focus on maintaining robust compliance measures to prevent future regulatory challenges and ensure a successful path to redemption.