NEW YORK – Citing the coronavirus pandemic and an unprecedented need for loans and assistance for small businesses, the Federal Reserve is lifting its lending restrictions on Wells Fargo.

The Fed has had Wells under a tight leash due to the bank’s prior scandalous behavior, including the opening of millions of fake accounts.

The Fed will allow Wells to grow its assets, but only for loans that fall under the $349 billion Paycheck Protection Program and the Fed’s upcoming own small business lending program.

The PPP launched Friday. Wells, one of the largest small business lenders in the country, quickly hit its Fed-imposed $10 billion threshold on loans. Wells customers who tried to apply for a loan this week were told that Wells was unable to accept more applications, leaving them to scramble to find another bank that would lend to them under the program.

The Fed, using its supervisory powers over the nation’s banking system, punished Wells Fargo in 2018 for the numerous scandals that plagued the bank. The bank’s employees were caught opening millions of fraudulent accounts in order to meet sales figures, and found bundling auto insurance to auto loans when customers did not need it.

Wells had been pushing hard to have its asset cap removed, and its new CEO, Charles Scharf, had made it his top priority to clean up Wells’ poor culture and allow it to move forward.