The Federal Reserve will not lift its asset restriction on Wells Fargo & Co. until the regulator is satisfied with the bank's progress in fixing its risk management operation, Fed Chairman Jerome Powell told reporters March 20.
Powell said Wells Fargo has "a lot of work" to do in addressing the "deep problems" that led to the Fed slapping an unprecedented penalty on the bank, which had opened millions of unauthorized accounts for customers and has faced other scandals.
In February 2018, the Fed restricted Wells Fargo from growing its asset size beyond its end-of-2017 level of $1.952 trillion.
"We will not lift that until Wells Fargo gets their arms around this, comes forward with plans, implements those plans and we're satisfied with what they've done. And that's not where we are right now," Powell said at a news conference following the Fed's latest monetary policy decision.
Wells Fargo President and CEO Timothy Sloan has acknowledged that the Fed's restriction on the bank's growth would stay in place this year and has defended the bank's efforts to reform its culture.
The day after Sloan's March 12 testimony at the House Financial Services Committee, Wells Fargo disclosed that he received a roughly 5% raise to a total compensation amount of $18.4 million in 2018. Democrats, some of whom have called for Sloan to be ousted, have criticized the raise he received.
Asked whether the raise was appropriate, Powell said the Fed does not approve company officials' individual pay packages and that its main supervisory focus is to ensure Wells is "fundamentally rebuilding" its risk management approach.
"We do supervise boards of directors for having a set of compensation practices that don't reward short-term risk taking and that sort of thing, and we will supervise based on that," Powell said.