Regulation and Supervision

On 2 February 2018, her last day as chair of the Federal Reserve, Janet Yellen's Board issued a consent order that barred Wells Fargo from growing its total assets beyond their level at the end of 2017, about $1.95 trillion, until it fixed its governance and risk management to the Fed's satisfaction. The order also required the bank to replace four board members. The Fed had never imposed such a cap on a large bank. It followed the discovery, from 2016, that branch employees under sales pressure had opened millions of accounts customers had not asked for (Chapter 20), and the Fed's view that the board had not overseen the risks that produced them.

The cap lasted more than seven years. During the deposit surge of 2020–21, Wells had to turn away some corporate deposits, shrink trading assets and run off lower-return loans to stay under it, while JPMorgan and Bank of America grew their balance sheets by hundreds of billions of dollars. The Fed lifted it on 3 June 2025, saying Wells had met its conditions after third-party reviews; the last remaining provisions of the 2018 order were terminated in March 2026 (reported). No fine in the scandal cost Wells as much as the growth it could not have. This chapter explains how American finance is regulated, what the post-2008 rules did, how supervisors enforce them, and why the rules of 2026 are unusually unstable.