A regulatory agency that supervises national banks has taken action against USAA Bank for engaging in unsafe or unsound banking practices.
The Office of the Comptroller of the Currency (OCC) – an independent bureau within the U.S. Department of the Treasury that charters, regulates, and supervises banks – filed a consent order Feb. 15 stating USAA has failed to implement and maintain a risk management program suitable for its size, complexity, and risk profile.
USAA Bank is the 28th largest U.S. bank based on deposits at $71 billion (2017), according to a company fact sheet.
The consent order, in which USAA does not admit wrongdoing, also states that the bank’s internal controls and information systems do not comply with guidelines in the Code of Federal Regulations, its internal audit program is inefficient, and the bank “failed to implement and maintain an effective compliance management system that includes processes and practices designed to manage consumer compliance risk.”
The OCC’s action comes just over a month after the Consumer Financial Protection Bureau (CFPB) charged the San Antonio-based financial institution with violating banking and consumer protection laws. In that case, USAA agreed to pay $3.5 million as a civil penalty and $12 million in restitution for those violations deemed “unfair acts or practices” in the consent order. The OCC and CFPB cases are unrelated.
“In some cases, USAA’s processes, systems, and controls did not keep pace with our growth or the changing regulatory environment,” USAA said in a prepared statement. “USAA already has been proactively addressing these issues and made progress enhancing our systems and processes in these areas. Prioritizing compliance is key to ensuring we continue to serve members with excellence and meet regulatory expectations.”
USAA also responded by stating it is complying with the OCC’s regulatory expectations and that it was “proactively addressing these issues and made progress enhancing systems and processes.”
“Over the past year, we have created a comprehensive action plan across the enterprise to strengthen our risk, compliance, IT and audit functions,” officials stated.
The agreement with the OCC does not involve a fine or require restitution to members, USAA said.
The consent order states that USAA has 15 days to appoint a compliance committee and submit the members’ names to the assistant deputy comptroller. Within 75 days, it must develop a written plan to achieve compliance with regulations. The 21-page consent order was signed in December by USAA CEO Stuart Parker, USAA Bank President Chad Borton, Chief Operating Officer Carl Liebert, and other bank board members.
Last fall, USAA announced it was doubling its charitable giving in San Antonio and elsewhere. But in January, the financial services provider to the military made headlines for declining to offer low-interest loans to federal employees affected by the government shutdown. USAA responded by making a $15 million donation to aid Coast Guard service members.
A 2018 Bank RepTrak study ranked USAA Bank as the most reputable bank among customers and non-customers. The study, a partnership between Reputation Institute and American Banker, first ranked USAA in 2017, when it came in first among customers and second for excellent overall reputation in the United States.