Banking

Warren urges OCC to block TD-First Horizon deal

Sen. Elizabeth Warren, D-Mass., is urging the Office of the Comptroller of the Currency to reject Toronto-Dominion Bank’s $13.4 billion acquisition of First Horizon, citing concerns about customer abuse.

In a letter co-signed by Reps. Katie Porter, D-Calif., Al Green, D-Texas, and Jesus Garcia, D-Ill., Warren cited a report by Capitol Forum that found TD used similar employee incentives as those that contributed to the fake-accounts scandal at Wells Fargo.

The Canadian bank, according to the letter, used a point system that incentivized employees to “push as many customers into overdraft protection as possible, threatening employees with lost bonuses or even firings if goals were not met.” TD employees would report account fraud or “‘fictitious problems’ to consumers to encourage them to open up even more accounts,” according to the letter.

“The Biden Administration has previously stated its intentions to review regulations governing big bank mergers,” Sen. Elizabeth Warren, D-Mass., wrote in her letter to acting Comptroller Michael Hsu, “and you have previously called for further public participation in the process.”

Bloomberg

After the OCC uncovered misconduct in 2017, then-acting Comptroller Keith Noreika chose to privately reprimand TD, rather than issue a fine or publicly disclose the findings, Capitol Forum reported. Noreika represented TD as a lawyer both before and after his stint as comptroller, the Democratic lawmakers noted in their letter.

As of May, TD employees alleged that the problems were continuing, Capitol Forum reported. 

TD, in a statement Tuesday, called the report’s findings “unfounded.” The bank said that it “has not identified systemic sales practice issues at any time.”

“Our compensation practices — which place a heavy emphasis on customer satisfaction — are carefully and actively managed. We vehemently object to any allegations of systemic sales practice issues, or any other claims alleged in the article,” the bank said.

TD also said that it “strongly” disagrees with “the article’s characterization of information presented as facts regarding TD Bank’s fraud procedures.”

“At TD Bank, protecting the security of our customers’ accounts and personal information is a top priority,” the bank said in the statement. “We follow industry-best practices that are designed to detect and help prevent fraud.”

Warren, in her letter to Comptroller Michael Hsu, asked the OCC to release the findings of its 2017 investigation. The letter was reported earlier by CNBC. 

“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 wrote. 

TD’s bid to acquire First Horizon would create a top-six bank in the United States by assets. It comes at a time when banking regulators, notably the OCC, have expressed concern about regional bank mergers.

In her letter, Warren alluded to rising skepticism in Washington about large bank M&A deals.

“The Biden Administration has previously stated its intentions to review regulations governing big bank mergers,” Warren wrote in her letter to Hsu, “and you have previously called for further public participation in the process.”

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