Wells Fargo chief financial officer John Shrewsberry said on “Closing Bell” that the asset cap imposed on the bank by the Federal Reserve is potentially costing the firm billions in revenue and earnings. He said working to satisfy the central bank enough to have the cap lifted is “the most important work that we’re doing.”
“We’ve had to do a few things that have definitely cost us interest income at the margins to be able to navigate through that, and we’ll continue to as long as the cap is in place,” Shrewsberry said. “It’s hard to put a number on it, but if our balance sheet as 10% bigger — call it $2.2 trillion versus of just under $2 trillion — there’s a few billion dollars worth of revenue, most of which probably falls to the bottom line.”
Shrewsberry also said that the credit lines that major companies drew down on at the beginning of the pandemic are “substantially all paid down now,” crediting the improvement in the credit markets after support from the Federal Reserve.The bank’s shares dropped 4.4% after it reported its second quarter results and dividend cut. — Jesse Pound