WASHINGTON — Democrats on the Senate Banking Committee pressed U.S. Bank for more details about fake consumer accounts that were recently revealed by regulators — the latest sign of government scrutiny as the nation's fifth-largest bank pursues approval of a major acquisition.
In a
"It is unacceptable that U.S. Bank provided incentives to and pressured its employees to take advantage of their unique access to a veritable treasure trove of sensitive, personal information to sign up unsuspecting customers for fee-generating financial products and services," Senate Banking Committee Chair Sherrod Brown wrote in the letter, which was co-signed by Sens. Catherine Cortez Masto of Nevada, Elizabeth Warren of Massachusetts, Bob Menendez of New Jersey and Chris Van Hollen of Maryland.
The lawmakers pressed Cecere for details about U.S. Bank's fake-accounts scandal, which echoes a
Brown and his colleagues asked U.S. Bank to provide the number of unauthorized accounts opened since 2010, to say whether any employees engaged in the unauthorized account scheme were still employed by the institution, and to provide the date at which the bank's management and board of directors first became aware of the scheme, the total revenue generated by the creation of the sham accounts and more.
The letter also suggested that the scandal will hang over the bank until at least September, when the Senate Banking Committee plans to host an annual Wall Street oversight hearing. The hearing has not yet been scheduled, but the letter said the senators would "look forward" to Cecere's "participation."
In a statement, a U.S. Bank spokesperson said that the CFPB settlement "related to legacy sales practices involving a small percentage of accounts dating back to 2010. Since 2016, the bank has made process and oversight improvements that have been effective in addressing these sales practices and concerns."
"We look forward to responding to the letter," the bank spokesperson said.
The senators' letter is the
The two banks originally said they expected the deal to close by June, but later
Under the Biden administration, the government has
The lawmakers' letter did not mention the pending merger with MUFG Union Bank. But Jeremy Kress, co-faculty director of the University of Michigan's Center on Finance, Law and Policy, said that the fine and consent order levied against U.S. Bank is "at a minimum likely to delay any approval" from regulators.
The allegations against the $559 billion-asset bank are similar to those brought against Wells Fargo related to its 2016 fake-accounts scandal.
"When a merger applicant has a recent consent order, regulators will generally want to make sure that the bank remediates, and then validate that remediation — perhaps through an examination cycle," said Kress.
Kress argued that the consent order suggests the CFPB should have a more direct voice in bank merger approvals. Under current law, only a bank's prudential bank regulators, such as the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Reserve, have a direct role in approving a merger. The Department of Justice must also approve bank mergers through an antitrust lens.
"The OCC and the FDIC, which have the merger applications in front of them, do not supervise U.S. Bank for consumer compliance," Kress said. "It's the CFPB that supervises the bank's compliance systems and is in the best position to be able to tell whether U.S. Bank has sufficiently strong consumer compliance systems to warrant this significant expansion."
