Banking regulators’ treatment of Wells Fargo over its fake-account scandal is getting ridiculous. Bloomberg reported last month that the asset cap that the Fed imposed on Wells Fargo in 2018 following the scandal has cost the company (assuming it would have grown at the same rate as its big-bank competitors) $4 billion in forgone earnings, which strikes me as an awful lot of money.
Actually, the continuing cap is doubly ridiculous, since a) Wells has already paid around $3 billion in fines and penalties related to the scandal, b) the company’s management has been entirely overhauled and is now led by outsiders, who of course had nothing to do with the fake-account hijinx in the first place, and, c) the economy is in recession; one would think that banking regulators would be doing whatever they could to ensure that large lenders were in a position to prudently provide as much credit as they could. This doesn’t seem like a tough call. Oh, and 2016, which is when the fake-account scandal first broke, was a long time ago. Perhaps it’s time for the Fed to finally close the book on the Wells matter and move on to more pressing issues.