The Federal Reserve says it will “temporarily and narrowly modify” the asset cap imposed on Wells Fargo so the bank can lend more to Main Street.
“The change today provides additional support to small businesses hurt by the economic effects of the coronavirus,” the Fed said in a statement about the bank’s consent order Wednesday.
As part of the resolution of the bank’s fake-accounts scandal, Wells Fargo has had its assets limited to its year-end 2017 level since early 2018.
In response to the Fed’s move, Wells Fargo CEO Charlie Scharf said since the start of the Small Business Administration’s $349 billion Payroll Protection Program on Friday, the bank “received more than 170,000 indications of interest from our customers, and know there is much more need.”
The PPP is part of the $2.2 trillion stimulus package, known as the Coronavirus Aid, Relief and Economic Security (CARES) Act.
“While we are pleased to be able to help more small businesses through the Paycheck Protection Program, we note that the Federal Reserve’s action does not — and should not — in any way relieve us of our obligations under the consent order,” Scharf explained.
“Today’s exemption is solely due to the extraordinary circumstances caused by the pandemic. The cap was meant to sanction Wells Fargo, not its customers when they need as much help as fast as possible due to no fault of their own,” said Dennis Kelleher, head of the financial reform advocacy group Better Markets, in a statement.