USAABank gets failing grade over ‘illegal’ practices
SAN ANTONIO — USAA Federal Savings Bank has received a failing grade from a bank regulator over evidence of “discriminatory or other illegal credit practices.”
The Office of the Comptroller of the Currency 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. The bank is a subsidiary of the San Antonio financial services company USAA, which has about 13 million members made up of current and former members of the military and their families
The CRA, enacted in 1977, requires regulators to assess a bank’s record of helping to meet the credit needs of the community, including in low- and moderate-income neighborhoods.
The OCC found evidence of 546 violations of the Servicemembers Civil Relief Act, including failure to provide protections to military reservists as the act requires, wrongful repossession of vehicles, and the filing of “inaccurate” affidavits in default judgment cases.
The act provides protections for service members in the event their military service impedes their ability to meet financial obligations. It protects them fromdefault judgments.
The regulator also found evidence of 54 violations of the Military Lending Act relating to collection of past due amounts from members. The act protects service members and their families from lending practices that could pose a threat tomilitary readiness and affect service member retention.
“The rating by the OCC does not reflect our ongoing commitment to lend to and invest in local low-and-moderate-income communities,” USAA spokesman Matt Hartwig said in an email Monday. “Our mission calls us to help ensure the financial security of all ourmembers. We have higher expectations of ourselves and are focused on restoring our CRA ratings to previous levels.”
The OCC oversees all national banks and federal savings associations. It is an independent bureau
of the U.S. Treasury Department.
USAA Bank had about $100.8 billion in assets as of June 30, which places it among the 35 largest banks in the country.
The OCC completed its evaluation of USAA Bank last year, but the findings were only released last week.
Kenneth H. Thomas, a Miami
banking analyst who is president of Community Development Fund Advisors, said USAA Bank’s CRA evaluation was “rare” and “surprising” because only 2 percent of banks receive a failing grade.
USAA gets an “A” for its ubiquitous television advertisements to bring in members of the military
as customers, but gets an “F” for compliance with regulations, Thomas said.
“They’re spending a lot of money on TV ads, huge amounts of money,” he said. “They need to spend a lot more money in the area of compliance.”