USAA Federal Savings Bank finds itself in more hot water
Federal regulators have taken action against USAA Federal Savings Bank for the second time this year.
The Office of the Comptroller of Currency, which regulates banks, recently issued a ceaseand-desist order against USAA Bank for “engaging in unsafe or unsound banking practices.”
The OCC’s action is unrelated to a $3.5 million civil penalty and $12 million in restitution that the Consumer Financial Protection Bureau ordered the bank to pay last month to settle charges it violated banking laws, USAA Bank spokesman Matt Hartwig said.
The OCC found USAA Bank’s internal controls and informations systems do not comply with certain guidelines and the bank failed to implement and maintain a “Risk Management Program” equivalent with its size and risk profile.
“USAA should have focused more on the necessary processes, technology and regulatory expertise in certain areas as we grew,” Hartwig said in an email.
USAA, a financial services company, serves members of the military, veterans and their families. It had about 12.8 million members at the end of last year, though not all bank with USAA
Bank, a subsidiary.
The bank had $81.6 billion in assets at the end of last year, swelling by about 30 percent over the last five years.
“This bank really has to get its compliance house in order before it continues to grow, especially when it’s serving our military,” said Ken Thomas, a Miamibased bank analyst. “If it were a small bank in Iowa, we wouldn’t care that much. But for a bank of this size, we expect that they have state-of-the-art technology, compliance, risk management, and they don’t.”
USAA Bank neither admitted nor denied the OCC’s findings, the 21-page consent order said. The OCC established various requirements for the bank to meet, including submitting a written plan that addresses “a program to develop, attract and retain (IT) talent and maintain appropriate staffing levels.”
USAA Bank is prioritizing compliance, Hartwig said.
“For some time, USAA has been working to strengthen and regularly improve our processes, technology and regulatory expertise,” he said. “We will continue to invest in these areas to help ensure
“We have more to do to continue delivering the service members deserve.”
Matt Hartwig, USAA Bank spokesman
we continue to deliver the best possible service to our members.”
The order was issued Jan. 7, four days after the bank’s settlement with the Consumer Financial Protection Bureau. USAA 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 did not admit or deny the CFPB’s findings in agreeing to settle.
Hartwig said the consent order with the Office of the Comptroller of Currency does not include a fine or require it make restitution to members.
“We already have been proactively addressing these issues and made progress enhancing our systems and processes,” he said. “But we have more to do to continue delivering the service members deserve.”