Wells Fargo (NYSE:WFC) has underperformed its big bank peers for several years. The infamous fake accounts scandal led to the uncovering of several other major problems with the bank's corporate culture, and the bank's almost exclusive reliance on consumer banking caused its underperformance to continue during the COVID-19 pandemic.

However, there's reason to believe that the worst could be over, and that Wells Fargo could actually rebound nicely in the post-pandemic world. In this Jan. 4 Fool Live video clip, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss one of several potential catalysts that could cause Wells Fargo to soar in 2021 and beyond. 

Jason Moser: Let's talk a little bit about Wells' relationship with Fed because they've been dealing obviously with the capital and buybacks, the capital and dividends. There was a Fed penalty involved too here with this business, right?

Matthew Frankel: Right. Well, first of all, Wells Fargo is still Wells Fargo. It's important to point that out. In South Carolina, Wells Fargo is the biggest bank in this area. I'm a Wells Fargo customer, pretty much everyone I know is a Wells Fargo customer. A lot of people that I know were victims of one of their various scandals because there were so many of them.

Moser: Sure.

Frankel: But do you know how many people I know that have switched away from Wells Fargo?

Moser: I got to believe it's probably none because it's too much work to do it. 

Frankel: Zero. It a pain to switch banks.

Moser: [laughs] Yeah, it really is, there's something to that.

Frankel: They're still Wells Fargo, this is still the big operation. But you mentioned their Fed penalty, this will be three years in February since the Fed put this penalty on Wells Fargo. It's kind of unprecedented, they said that they're not allowed to grow their assets, the bank is not allowed to grow. It's arguably been the best growth environment for banks in 30 years after the tax cuts and the stronger economy, there's tons of demand for loans right now just because interest rates are low. It's been a great environment for banks to grow which is why the rest of the banking sector has performed well. But in Wells Fargo's case, it's not allowed to grow. Everyone pretty much thought that the penalty would've been lifted by now. The condition was very vague, it was when Wells Fargo makes substantial changes to its corporate culture, and enough to satisfy regulators, which is a very vague condition.

Moser: It really is. I wonder how they measure that stuff. Certainly, you can't just say, "Well, we're going to go by what's your Glassdoor rating is and then [laughs] going to go from there."

Frankel: First, they got rid of the CEO who had presided over the bank during all the scandals, and replaced him with someone else internally. The Fed said, "No, that's not good enough." Now that they finally have a new CEO, Charlie Scharf, pretty much a brand-new management team, they've overhauled the Board, they've made a big changes to the incentive structures that were really the root cause of the problem in the first place. It's tough for me to make the argument that they haven't made enough changes. I mean, what does the Fed want them to do? Change their name? Other than what they've done, I really can't think of how they would overhaul their business anymore, other than actually selling themselves to a competitor or something like that. I think there's a high probability that that gets removed in 2021.

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