A Wells Fargo branch in New York (Photo: Bloomberg)
Wells Fargo sold hundreds of millions of dollars in assets earlier this year in order to meet the $1.95 trillion asset limit imposed on it by the Federal Reserve after its fake-accounts scandal, according to a Wall Street Journal report.
As customers took loans and drew down hundreds of billions of dollars on their credit lines in response to the pandemic, this increased the size of the bank — which then moved quickly to sell assets and stay beneath the Fed's asset cap, people familiar with the matter told the paper.
The bank's sales of receivables were about 10% above its average level, a source told the Journal. The asset sales weren't made at a loss, another person said.
For instance, the bank sold assets related to financing that helps large companies, including Walmart, pay suppliers, manage cash flow and the like.
Wells Fargo "ramped up its sales of these assets more than usual in the second half of March and early April," according to the Journal.
In early April, the Fed opted to "temporarily and narrowly modify" the asset cap imposed on Wells Fargo so the bank could lend more to Main Street.
The news on the bank's asset sales comes two days after Sens. Elizabeth Warren, D-Mass., and Brian Schatz, D-Hi., demanded Wells Fargo CEO Charles Scharf respond to questions about the bank's "pausing" of mortgage payments without borrowers' consent as part of a program tied to fallout from the coronavirus.
