Lawmakers led by Sen. Elizabeth Warren requested a key regulator to block Toronto-Dominion Bank’s $13.4 billion acquisition of a regional U.S. bank due to allegations of buyer abuse.
In a letter despatched Tuesday to the Workplace of the Comptroller of the Foreign money obtained completely by CNBC, Warren cited a Could 4 report from Capitol Discussion board, a Washington-based investigative information outfit, that alleged that TD used ways related to these within the Wells Fargo faux accounts scandal.
TD, a Toronto-based bank with 1,100 branches within the U.S., is in search of regulatory approval for the acquisition of Tennessee-based First Horizon. The large deal, introduced in February, is a part of TD CEO Bharat Masrani’s push to expand within the American Southeast. Banks have been swept up in a wave of consolidation lately as lenders search to acquire scale, reduce prices and put money into fintech to compete with megabanks like JPMorgan Chase and Bank of America.
“As TD Bank seeks approval from your agency to increase their market share and become the sixth-largest bank in the U.S., the OCC should closely examine any ongoing wrongdoing and block any merger until TD Bank is held responsible for its abusive practices,” Warren mentioned.
TD employed a degree system and bonuses to incentivize staff to open buyer accounts and choose into overdraft safety, and staff might lose their jobs in the event that they did not meet targets, Warren mentioned in letter to appearing OCC Comptroller Michael Hsu.
Employees had been instructed to create 4 new accounts for every buyer — checking, financial savings, on-line and a debit card — and opened accounts even when a shopper declined one of many choices, in accordance to the Capitol Forum.
That was considered one of a number of methods cited by the information group, together with fabricating causes to name customers like fraud alerts within the hope of convincing them to open extra accounts, opening new accounts slightly than merely changing lacking debit playing cards, and misstating key points of overdraft applications to encourage their adoption. Issues existed in branches all alongside TD’s U.S. footprint, from Florida to Maine, the report acknowledged.
CNBC could not independently affirm the small print of the Capitol Discussion board report, which cited present and former TD Bank workers in addition to different sources.
In a four-paragraph response offered to CNBC by a bank spokesman, TD mentioned the allegations within the Capitol Discussion board piece had been “unfounded.”
“Our business is built on a foundation of ethics, integrity and trust,” the bank mentioned. “At TD Bank, we put our customers first and are proud of our culture of delivering legendary experiences to customers. As part of routine and ongoing monitoring, TD Bank has not identified systemic sales practice issues at any time.”
The bank mentioned it rigorously manages compensation practices and “vehemently” objects to accusations of “systemic sales practice issues, or any other claims alleged in the article.”
“Finally, we strongly disagree with the article’s characterization of information presented as facts regarding TD Bank’s fraud procedures,” the bank mentioned. “At TD Bank, protecting the security of our customers’ accounts and personal information is a top priority.”
The Capitol Discussion board report additionally alleged that the OCC, beneath earlier management, had really uncovered TD’s misconduct in 2017 as a part of an business sweep after the Wells Fargo scandal got here to mild the 12 months earlier than.
The report alleged that former appearing Comptroller Keith Noreika — a Trump administration appointee whose legislation agency later represented TD in multibillion greenback transactions — opted to privately reprimand TD, slightly than fining the corporate or publicly releasing its findings.
Noreika declined to remark to the Capitol Discussion board, however his employer, the white-shoe legislation agency Simpson Thacher & Bartlett, informed the information outfit that Noreika was recused from all issues associated to TD whereas heading the regulator.
“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 mentioned. She added that the Biden administration has acknowledged it could scrutinize bank mergers extra intently.
The OCC did not instantly reply to a request for remark.
Other than requesting that the First Horizon acquisition be blocked, the lawmakers requested the OCC to launch the findings of its 2017 investigation into TD and rethink whether or not penalties must be levied on the corporate. The letter was signed by Warren and U.S. Representatives Katie Porter, Al Inexperienced and Jesus Garcia.
TD mentioned in February that it anticipated the First Horizon acquisition to shut by the primary fiscal quarter of 2023, topic to approval from U.S. and Canadian regulators. The deal might be scrapped if it does not shut by Feb. 27, 2023, in accordance to the bank.