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January 30, 2023

On the 5th Anniversary of the Asset Cap on Wells Fargo, the Fed’s Credibility Is at Risk; It Should Stop Capital Distributions and Break Up the Bank

WASHINGTON, D.C.— Dennis M. Kelleher, President and CEO of Better Markets, released the following statement on the upcoming 5th anniversary on February 2, 2023 of the Federal Reserve imposing a cap on Wells Fargo’s asset growth:

“It is now obvious that giant Wall Street banks like Wells Fargo are not only too-big-to-fail and too-big-to-manage, but also too-big-to-regulate.  The credibility of banking regulators is at stake after five years of an unprecedented asset cap and multiple ongoing failures resulting in serious, repeated violations of law and abuse of customers by Wells Fargo.  Thus far, (1) the bank has paid almost $10 billion in customer restitution and fines, (2) two CEOs and numerous senior executives have been fired, (3) numerous members of the Board of Directors have been removed, (4) the Federal Reserve (Fed) imposed an asset cap and related orders, (5) the Office of the Comptroller of the Currency (OCC) imposed a mortgage servicing cap, and (6) numerous other penalties and actions have been imposed by regulators.  But all have failed to bring Wells Fargo into compliance, and it is now beyond dispute that the financial regulators’ actions have been insufficient.

“If the Fed and the OCC are to have any credibility, they cannot allow an egregious recidivist like Wells Fargo to continue with business as usual, saying year-after-year ‘we’re making progress’ while continuing to not make enough progress.  Five years has to be more than enough.  The Fed and OCC should order the immediate suspension of all capital distributions (which totaled more than $100 billion over the past five years), require all retained earnings to be devoted to addressing the ongoing deficiencies, and order the submission of a plan for Wells Fargo to break itself up into smaller, separate companies that can be properly managed and fully comply with the law.  As proved by OCC Comptroller’s Hsu’s recent speech on too-big-to-manage (along with longstanding safety and soundness and Bank Holding Company Act regulatory authorities), the OCC and Fed clearly have the authority to take such actions.  The failure to do so in the face of such blatant, ongoing failures by Wells Fargo would be an admission that too-big-to-fail banks like Wells Fargo are above the law and cannot be regulated.

Five years ago, on February 2, 2018, the Federal Reserve for the first time ever imposed a cap on Wells Fargo’s asset size at $1.93 trillion via a cease and desist order that it required each member of the Board of Directors to sign.  This action was clearly warranted given the bank’s repeated, egregious, widespread, and years-long illegal conduct abusing customers and its unwillingness or inability to fully fix the many regulatory failings that the Fed and other agencies had identified.  However, even after such a draconian action and the passage of five years, the bank has not fixed its many deficiencies.  Exhibit A proving that is the CFPB’s recent $3.7 billion settlement and fine. Exhibit B is the bank’s failure to address the innumerable compliance issues sufficient to warrant the Fed’s removal of the cap.

“The repeated and ongoing failures after five years are clear evidence that the bank is too big to manage because it cannot even fix the multiple serious deficiencies identified by the regulators.  Even if you assume that Wells Fargo’s current CEO, who joined the bank more than four years ago on October 21, 2018 acted at all times with the intent and desire to fix the banks problems, he has nonetheless clearly failed.  For example, the CFPB’s latest action and penalties were not  just for past consumer abuses: the auto and overdraft violations extended into the term of the current CEO. Additionally, as reported in the media and as the CFPB pointed out, the bank has been focused on ‘product launches, growth initiatives, and other efforts to increase profits [that] have delayed needed reforms.’

“The Fed must move beyond wagging its finger and order the immediately suspension of all capital distributions.  In the five years since the cap has been in place, the bank has paid out roughly $69 billion in share buybacks and $33 billion in dividends.  That amount, totaling more than $100 billion, should have been retained and used to fix the many still outstanding compliance, risk, and management control problems.  The Fed should also require the bank to provide an action plan for breaking up the bank into several smaller, more manageable companies that could each be spun off as free-standing public companies.  If Wells Fargo cannot prove that it has fixed all its deficiencies within six months, the bank should be required to implement the plan.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit


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