Wells Fargo forced to close loan applications due to asset cap - Business Insider

that it is limited to distributing a maximum of $10 billion in loans to small businesses due to its asset cap imposed by the Federal Reserve in 2018 — the volume of loan applications Wells Fargo received between April 4 and April 5 was high enough that it would certainly hit that capacity, and it closed applications as a result.

The bank added that it will focus its lending on nonprofits and small businesses with fewer than 50 employees. Of note, technical glitches many banks from being able to initially accept loan applications on April 3, when the PPP officially launched — only Bank of America and JPMorgan Chase were able to accept applications that day, whereas Wells Fargo's portal opened on the next day.

Wells Fargo has tried to shake the asset cap in order to extend greater coronavirus relief to consumers and businesses. The $1.95 trillion asset cap was imposed in response to the bank's 2016 fake account scandal, and it limits how much Wells Fargo can hold on its balance sheet.

Other banks are already dwarfing Wells Fargo in terms of potential loans, with BofA's application volume accounting for nearly 10% of the $350 billion allocated for small business relief by Congress. As of Monday, BofA reported having already received applications from 177,000 small businesses, totaling $32.6 billion in potential loans, pending approval, CNBC .

Going forward, Wells Fargo's loss could be other banks' gain. With Wells Fargo unable to facilitate loans beyond $10 billion, there could be an opening for other banks to take on applicants that were shut out by the cap.

I have questions about this. Isn't their 'asset cap' totally separate from any monies they get under the relief program? Are they using the money to cover other problems?

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