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Photo: Streeter Lecka/Getty Images

The Federal Reserve said Wednesday it will temporarily lift Wells Fargo’s growth restriction put in place following the bank’s customer abuse scandals.

Why it matters: One of the nation's biggest lenders said the Fed's asset cap prevented it from lending more to struggling small businesses as part of the government's aid package. Now Wells Fargo says it will reopen its application process and lend to a broader set of business owners.

Details: Wells Fargo can now expand assets beyond $1.95 trillion for the first time since the 2018 penalty — but only for the purpose of issuing loans via the Paycheck Protection Program (PPP), as well as another small business program that will be announced by the Fed.

  • The bank surprised clients on Sunday when it said it had already reached a capacity of $10 billion, and would only lend to businesses with fewer than 50 employees.
  • That left a lot of customers wondering how they would get access to the loans.

Between the lines: When Wells Fargo's newest CEO, Charlie Scharf, took the helm last year, one of his goals was to work with regulators to get the bank's growth cap removed.

  • But the Fed indicated Wells Fargo has more work to do before it's removed permanently.
  • What they're saying: "[T]he firm has ... not satisfied all of the requirements for removal of the asset growth restriction," the central bank noted.

The bottom line: Wells Fargo has a ton of demand from small business customers that need the aid to pay employees and their bills while the economy is shut. The Fed's asset restrictions no longer keep it from fulfilling that demand.

  • "In the first two days alone, we received more than 170,000 indications of interest from our customers, and know there is much more need," Scharf said in a press release.

Go deeper

Off the Rails

Episode 4: Trump turns on Barr

Photo illustration: Eniola Odetunde/Axios. Photos: Drew Angerer, Pool/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. Axios takes you inside the collapse of a president with a special series.

Episode 4: Trump torches what is arguably the most consequential relationship in his Cabinet.

Attorney General Bill Barr stood behind a chair in the private dining room next to the Oval Office, looming over Donald Trump. The president sat at the head of the table. It was Dec. 1, nearly a month after the election, and Barr had some sharp advice to get off his chest. The president's theories about a stolen election, Barr told Trump, were "bullshit."

In photos: Protests outside fortified capitols draw only small groups

Armed members of the far-right extremist group the Boogaloo Bois near the Michigan Capitol Building in Lansing on Jan. 17. About 20 protesters showed up, AP notes. Photo: Seth Herald/AFP via Getty Images

Small groups of protesters gathered outside fortified statehouses across the U.S. over the weekend ahead of President-elect Joe Biden's inauguration Wednesday.

The big picture: Some protests attracted armed members of far-right extremist groups but there were no reports of clashes, as had been feared. The National Guard and law enforcement outnumbered demonstrators, as security was heightened around the U.S. to avoid a repeat of the Jan. 6 U.S. Capitol riots, per AP.

Felix Salmon, author of Capital
9 hours ago - World

China's economy grows 6.5% in Q4 as country rebounds from coronavirus

A technician installs and checks service robots to be be used for food and medicine delivery in Jiaxing, Zhejiang Province, China, on Sunday. Photo: Hu Xuejun/VCG via Getty Images

China's economy grew at a 6.5% pace in the final quarter of 2020, the national statistics bureau announced Monday local time, topping off a year in which it grew in three of four quarters and by 2.3% in total.

Why it matters: No other major economy managed positive growth in 2020. Although the COVID-19 pandemic was first detected in China, the country got the virus under control and became one of the main positive drivers of the global economy even as the rest of the world was largely under lockdown.