diff --git a/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java b/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java
index 1f4cd2ccb9e0..73e9d216e21e 100644
--- a/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java
+++ b/java/java-psi-api/src/com/intellij/psi/util/TypeConversionUtil.java
@@ -1005,16 +1005,8 @@ public class TypeConversionUtil {
         }
       }
       else {
-        boolean effectiveAllowUncheckedConversion = allowUncheckedConversion;
-        if (typeRight instanceof PsiCapturedWildcardType) {
-          effectiveAllowUncheckedConversion = false;
-          final PsiClass psiClass = PsiUtil.resolveClassInType(((PsiCapturedWildcardType)typeRight).getWildcard().getBound());
-          if (psiClass != null && !psiClass.hasTypeParameters()) {
-            effectiveAllowUncheckedConversion = allowUncheckedConversion;
-          }
-        }
         if (leftWildcard.isExtends()) {
-          return isAssignable(leftBound, typeRight, effectiveAllowUncheckedConversion && !containsWildcards(leftBound));
+          return isAssignable(leftBound, typeRight, false);
         }
         else { // isSuper
           final Boolean assignable = ourGuard.doPreventingRecursion(leftWildcard, true, new NotNullComputable<Boolean>() {
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA138957.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA138957.java
new file mode 100644
index 000000000000..6a109e2c61d7
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA138957.java
@@ -0,0 +1,11 @@
+import java.util.List;
+
+class MyClass<T>
+{
+  public MyClass(Class<? extends T> type) {}
+
+  public static void main(String[] args)
+  {
+    <error descr="Incompatible types. Found: 'MyClass<java.util.List>', required: 'MyClass<java.util.List<java.lang.String>>'">MyClass<List<String>> myClass = new MyClass<>(List.class);</error>
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
index a620c792dd74..91b9b4317a0a 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
@@ -524,6 +524,10 @@ public class GenericsHighlightingTest extends LightDaemonAnalyzerTestCase {
     doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false);
   }
 
+  public void testIDEA138957() throws Exception {
+    doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false);
+  }
+
   public void testJavaUtilCollections_NoVerify() throws Exception {
     PsiClass collectionsClass = getJavaFacade().findClass("java.util.Collections", GlobalSearchScope.moduleWithLibrariesScope(getModule()));
     assertNotNull(collectionsClass);