Federal banking regulators on Wednesday slapped USAA Federal Savings Bank with an $85 million fine for “violations of law” that were “part of a pattern of misconduct.”
The civil penalty stems from a consent order that the Office of the Comptroller of the Currency, which regulates federally chartered banks, issued in January 2019. The agency tagged USAA Bank for “engaging in unsafe or unsound banking practices.”
The OCC found USAA Bank’s internal controls and information technology systems did not comply with certain guidelines. The bank also failed to implement and maintain a risk management program sufficient for a bank its size.
USAA Bank is a subsidiary of San Antonio insurance and financial services company USAA.
“Simply put, we have fallen short of our high standards and those of our members and our regulators,” USAA CEO Wayne Peacock said in a statement. “As we grew quickly over the last decade, we never wavered from our commitment to serve members. However, we did not sufficiently invest in the capabilities and expertise necessary to meet regulatory requirements and evolving business needs.
“We have been working diligently and investing substantial resources to address the gaps. This is our most urgent and fundamental priority and is essential to serve members with excellence, now and in the future.”
On Wednesday, OCC officials provided no details of the evidence it had found of the bank’s misconduct.
USAA Bank had about $100.8 billion in assets as of June 30, placing it among the 35 largest banks in the country.
Wednesday’s consent order, which included the $85 million penalty, said the bank neither admitted nor denied violating banking laws.
Nearly two weeks ago, in a move related to the fine issued Wednesday, the regulator cut USAA Federal Savings Bank’s overall grade to failing over evidence of “discriminatory or other illegal credit practices.”
The OCC lowered USAA Bank’s overall Community Reinvestment Act performance evaluation rating from “satisfactory” to “needs to improve” after uncovering evidence of 600 violations involving customers.
Enacted in 1977, the CRA requires regulators to assess a bank’s record of helping to meet communities’ credit needs, including in low- and moderate-income neighborhoods.
The agency found evidence that USAA Bank had violated provisions of the law — that it failed to provide protections to military reservists, wrongfully repossessed vehicles and filed “inaccurate” affidavits in default judgments in civil court cases.
The OCC also said it had evidence that USAA Bank violated the Military Lending Act, relating to bank’s collection of past-due amounts from service members.
The penalty assessed Wednesday is the most recent black eye for USAA Bank.
In April, as the federal government sent stimulus checks to millions of Americans, USAA Bank kept portions of the funds deposited into some customer accounts that were overdrawn or had negative balances.
Criticism of USAA Bank’s stance erupted on social media, prompting the bank to reverse course. Bank officials said they would allow customers with negative account balances to access the full amount of their stimulus checks.
For members with overdrawn accounts at the bank, it said it would postpone collection for 90 days from the date the stimulus checks were deposited.
In a separate matter, a Virginia customer sued USAA Bank last month for allegedly calling her more than 130 times over two months to collect on a delinquent credit card bill, possibly violating the Telephone Consumer Protection Act.
USAA has said it will defend itself against the allegations.
On ExpressNews.com: USAA to make $50 million donation for racial equality initiatives
Last year, the bank had a run-in with another federal regulator.
The Consumer Financial Protection Bureau directed the bank to pay a $3.5 million fine and $12 million in restitution to settle charges it violated banking laws.
The bank failed to honor customers’ stop-payment requests on electronic fund transfers and had reopened customers’ previously closed deposit accounts without their authorization, the CFPB found.
The bank and the consumer protection watchdog agency entered into a consent order to settle the matter. The bank did not admit or deny the CFPB’s findings in agreeing to settle the matter.
Two days before the OCC announced the $85 million fine, USAA said it would donate $50 million over the next three years to help address racial inequality. About $7 million of the contributions will go to educational and job-training initiatives in San Antonio.
USAA has about 13 million members made up of current and former members of the military and their families.
diego.mendoza-moyers@express-news.net