Dive Brief:
- Sen. Elizabeth Warren, D-MA, on Tuesday urged the Office of the Comptroller of the Currency (OCC) to block TD Bank’s $13.4 billion acquisition of First Horizon until the bureau follows up on reports of customer fraud and abuse at TD.
- In a letter to the bank regulator, Warren cited a May 4 Capitol Forum report, which alleged TD incentivized employees to enroll customers in new accounts and services like overdraft protection without their consent.
- Capitol Forum also found the OCC investigated TD’s misconduct after Wells Fargo’s 2016 fake-accounts scandal, but Warren alleged the regulator “swept it under the rug” under the leadership of Trump appointee Keith Noreika.
Dive Insight:
“As TD Bank seeks approval from your agency to increase their market share and become the sixth-largest bank in the U.S., the OCC should closely examine any ongoing wrongdoing and block any merger until TD Bank is held responsible for its abusive practices,” Warren said in the letter.
According to the Capitol Forum report, the Toronto-based bank instituted a point system that pressured the bank’s employees to open as many accounts as possible over fears of lost bonuses or even firing. Workers were instructed to open checking, savings and online accounts and a debit card for each customer, even if they refused one of the accounts.
The lender employed several other profit-maximizing strategies at the expense of their customers, including manufacturing fraud reports to contact customers in an effort to convince them to open new accounts, according to the report.
Such abuses were widespread across TD Bank branches from Florida to Maine, the report found.
Allegations of fraud and abuse were investigated by the OCC in 2017, although the bureau’s acting comptroller at the time, Noreika, refused to publicly reprimand or fine the bank, the report found.
“The OCC’s decision under Mr. Noreika to allow TD Bank’s rampant fraud and abuse to go unpunished, even after the agency’s troubling findings in its own investigation of the bank, has the potential to undermine the OCC’s authority and put consumer finances at risk,” Warren said.
Noreika represented TD Bank prior to becoming acting comptroller, and again after departing from the OCC.
In the letter, Warren requested the regulator publicly release the results of the 2017 investigation, reconsider penalizing TD and prohibit the firm from making acquisitions until the consumer abuses are addressed.
Reps. Katie Porter, D-CA, Al Green, D-TX, and Jesus Garcia, D-IL, signed the letter, in addition to Warren.
The OCC, now headed by Democrat Michael Hsu and more willing to scrutinize bank mergers and acquisitions under a blue presidential administration, is slated to hold a public meeting Aug. 18 on the TD-First Horizon tie-up.
In a statement sent to CNBC, TD called the Capitol Forum allegations “unfounded.”
“At TD Bank, we put our customers first and are proud of our culture of delivering legendary experiences to customers,” the bank said. “As part of routine and ongoing monitoring, TD Bank has not identified systemic sales practice issues at any time.”
