WFC

Why Wells Fargo Stock Popped Today

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.

The facade of a bank.

Image source: Getty Images.

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.

Should you invest $1,000 in Wells Fargo right now?

Before you buy stock in Wells Fargo, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wells Fargo wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of February 12, 2024

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.