Wells Fargo received some rare good news Monday afternoon, as federal regulators accepted its living will and lifted the restrictions placed on the bank’s growth in December.
The Federal Reserve and Federal Deposit Insurance Corporation announced Monday that the bank had addressed the problems that had led them to reject its living will, which is supposed to be a credible plan for the bank to go bankrupt without causing a panic.
Wells Fargo has taken “important steps” to fix the problems with its plans, the regulators said, including rationalizing the legal entities contained within its overall corporate structure and making sure that subsidiaries would have access to shared services in case of a failure.
Tha banking giant received the all-clear Monday as it still struggles with the repercussions of its fake accounts scandal. A shareholder meeting scheduled for Tuesday is expected to feature last-minute decision making about the fates of directors who oversaw the bank during the scandal.
The scandal has become a point of reference for both sides in the debate over the role of regulation in the financial industry. Democrats have sought to cast the bank’s mistreatment of customers as emblematic of recklessness in banking. Republicans, meanwhile, have tried to emphasize regulators’ failure to stop the abuses earlier, arguing for simpler and fewer rules.
Originally, regulators had failed the living wills of five big banks a year ago. But of those five, Wells Fargo was the only one that hadn’t sufficiently revised its plan by December to receive a passing grade.
