Wells Fargo’s Regulatory Milestone: A Step Forward, But Challenges Remain

The Consumer Financial Protection Bureau’s (CFPB) termination of its 2018 consent order with Wells Fargo in April 2025 marks a pivotal moment in the bank’s long journey to rebuild trust and compliance. This decision, the sixth such regulatory closure this year and the twelfth since 2019, signals progress but also underscores the lingering complexities of Wells Fargo’s path to full recovery. As investors assess the implications, a nuanced analysis of regulatory milestones, financial performance, and ongoing risks is critical to determining the bank’s future trajectory.

Regulatory Rehabilitation: A Decade in the Making
The 2018 CFPB consent order was a response to systemic deficiencies in Wells Fargo’s risk management and compliance practices, which had fueled scandals like the unauthorized account openings that erupted in 2016. Its termination reflects years of work to overhaul governance, invest in technology, and strengthen oversight. CEO Charlie Scharf, who took the helm in 2019, framed the resolution as validation of the bank’s efforts: “Today’s termination… demonstrates the completion of critical risk and control infrastructure work.”

Yet, the path remains unfinished. Wells Fargo still operates under three remaining consent orders, including a Federal Reserve-imposed cap on assets from 2018, which limits its balance sheet growth. Additionally, a September 2024 agreement with the Office of the Comptroller of the Currency (OCC) over anti-money-laundering (AML) deficiencies highlights ongoing regulatory scrutiny. This duality—progress paired with persistent obligations—defines the current landscape.

Financial Performance: Resilience Amid Mixed Signals
Wells Fargo’s first-quarter 2025 results provided a mixed picture. While earnings per share (EPS) rose 16% year-over-year to $1.39, surpassing analyst expectations, revenue of $20.15 billion fell short of forecasts. The bank’s focus on cost discipline shone through: net income reached $4.9 billion, and $4.8 billion was returned to shareholders via dividends and buybacks. This underscores its financial stability, even as revenue growth lags.

Analysts like Truist Securities have tempered optimism, adjusting price targets downward due to macroeconomic uncertainties but maintaining a “Buy” rating. The bank’s ability to navigate economic volatility while meeting regulatory demands will be key to sustaining investor confidence.

The Bigger Picture: Risks and Opportunities
The termination of the CFPB order is part of a broader regulatory cleanup, but Wells Fargo faces two critical challenges. First, the Federal Reserve’s asset cap—capping growth at 2020 levels—remains a constraint. Removing this cap, which requires further regulatory approval, would unlock significant growth potential. Second, the OCC’s 2024 AML agreement and the lingering shadow of past missteps could deter institutional investors until compliance is conclusively proven.

Meanwhile, the bank’s strategic pivot toward fee-based businesses, such as wealth management and corporate banking, offers a path to sustainable growth. Its $1.9 trillion asset base and strong capital ratios provide a solid foundation, but execution will determine success.

Conclusion: A Milestone, Not a Finish Line
The CFPB’s decision to terminate the 2018 consent order is a meaningful step, but Wells Fargo’s story remains a work in progress. With $4.9 billion in net income and a resilient capital position, the bank has demonstrated financial fortitude. However, lingering regulatory obligations and the $250 million penalty from its 2021 OCC settlement remind investors that trust is hard-won and easily lost.

For investors, the calculus hinges on whether Wells Fargo can fully escape its regulatory past while capitalizing on its strengths. While the termination of this order lifts a significant overhang, the bank’s ability to navigate the remaining constraints—and prove its reformed culture—will ultimately determine its long-term value. In a sector where reputation is currency, Wells Fargo’s journey from scandal to compliance is far from over, but April 2025’s milestone suggests it is moving in the right direction—if cautiously.

Investors should monitor the Federal Reserve’s stance on the asset cap and the resolution of the OCC’s AML agreement as key inflection points. Until then, Wells Fargo’s progress is a step forward—not a finish line.