A key catalyst for Wells Fargo stock is finally here. The Federal Reserve Board announced Tuesday that it is finally lifting the $1.95 trillion asset cap imposed on Club name Wells Fargo since February 2018, a punishment brought on by the bank’s past misdeeds, including its notorious cross-selling scandal in the 2010s. “The removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies and that the bank has fulfilled the conditions required for removal of the growth restriction,” the Fed said in a press release. The asset cap had prevented one of Wall Street’s largest banks from growing key lines of its business for years. Now, the firm will once again have the ability to increase the amount of deposits it gathers, expand its loan activity and even grow its budding dealmaking division . In fact, the highly anticipated removal of the $1.95 trillion cap is a key reason why we first started a position in the stock a few years ago and have remained patient in owning it. Wells Fargo shares are up more than 2% in after-hours trading Tuesday. While some of Wells Fargo’s stock gains in recent months reflect the market pricing in the eventual removal of the asset cap, the Club believes there is plenty more upside that can be realized from here. “It’s a momentous day for shareholders. The lift is recognition of the tireless work CEO Charlie Scharf and his team have put in to improve risk and controls,” said Jeff Marks, the Investing Club’s director of portfolio analysis. “We look forward to the new growth opportunities Wells Fargo can pursue.” Indeed, Scharf has worked long and hard to shed the bank from its troubled past, which predates his tenure that began in 2019. Wells has cleared 14 consent orders, or regulatory punishments, since Scharf assumed his role – the most recent being last Thursday. It’s also the eighth closed in 2025 alone. “We’ve had this asset cap for a long time now. We’ve been working extremely diligently to fulfill all the requirements that exist in the consent order, both to lift the asset cap and, ultimately, lift the ultimate order,” Scharf said at an industry conference last week. To be sure, Wells is not fully out of the clear yet. The Fed said Tuesday that other elements of the 2018 order “will remain in place until the bank satisfied the requirements for their termination.” (Jim Cramer’s Charitable Trust is long WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
