Shares of Wells Fargo (NYSE: WFC) jumped Thursday after the company finally put the 2016 fake-account scandal behind it, as the Office of the Comptroller of the Currency (OCC) terminated a consent order it had issued in 2016 in response to Wells Fargo creating fake accounts in order to make sales quotas.
As of 2:30 p.m. ET, the stock was up 7.5% on the news.
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Wells Fargo repairs its reputation
CEO Charlie Scharf said in response to the announcement, "I have repeatedly said that implementing a risk control framework appropriate for a bank of our size and complexity is our top priority, and closing consent orders is an important sign of our progress. This is the sixth consent order that our regulators have terminated since 2019."
The news is another feather in the cap for Scharf, who has shored up the scandal-plagued bank since taking over in 2019, and reflects the progress the bank has made in improving its customer protection systems.
Wells isn't free of regulation just yet. In 2018, the Federal Reserve issued an asset cap in response to other risk management problems, which has restricted the bank's growth. It's unclear when that consent order might be lifted.
What it means for Wells Fargo
The OCC's move could set up the Federal Reserve to lift its consent order, relieving the company of its asset cap, which would likely give an even greater boost to the stock. However, some of today's gains may be due to hopes that the asset cap might be lifted.
The decision won't do much to change Wells Fargo's business or results, but it reflects an improvement in the bank's reputation, as well as increases chances that the asset cap will be lifted.
Keep an eye out for any news on the asset cap, as that could give Wells Fargo stock a significant boost.
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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has positions in Wells Fargo. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
