A regulatory agency that supervises national banks has taken action against USAA Bank for engaging in unsafe or unsound banking practices.

The Office of the Comptroller of the Currency (OCC) – an independent bureau within the U.S. Department of the Treasury that charters, regulates, and supervises banks – filed a consent order Feb. 15 stating USAA has failed to implement and maintain a risk management program suitable for its size, complexity, and risk profile.

USAA Bank is the 28th largest U.S. bank based on deposits at $71 billion (2017), according to a company fact sheet.

The consent order, in which USAA does not admit wrongdoing, also states that the bank’s internal controls and information systems do not comply with guidelines in the Code of Federal Regulations, its internal audit program is inefficient, and the bank “failed to implement and maintain an effective compliance management system that includes processes and practices designed to manage consumer compliance risk.”

The OCC’s action comes just over a month after the Consumer Financial Protection Bureau (CFPB) charged the San Antonio-based financial institution with violating banking and consumer protection laws. In that case, USAA agreed to pay $3.5 million as a civil penalty and $12 million in restitution for those violations deemed “unfair acts or practices” in the consent order. The OCC and CFPB cases are unrelated.

“In some cases, USAA’s processes, systems, and controls did not keep pace with our growth or the changing regulatory environment,” USAA said in a prepared statement. “USAA already has been proactively addressing these issues and made progress enhancing our systems and processes in these areas. Prioritizing compliance is key to ensuring we continue to serve members with excellence and meet regulatory expectations.”

USAA also responded by stating it is complying with the OCC’s regulatory expectations and that it was “proactively addressing these issues and made progress enhancing systems and processes.”

“Over the past year, we have created a comprehensive action plan across the enterprise to strengthen our risk, compliance, IT and audit functions,” officials stated.

The agreement with the OCC does not involve a fine or require restitution to members, USAA said.

The consent order states that USAA has 15 days to appoint a compliance committee and submit the members’ names to the assistant deputy comptroller. Within 75 days, it must develop a written plan to achieve compliance with regulations. The 21-page consent order was signed in December by USAA CEO Stuart Parker, USAA Bank President Chad Borton, Chief Operating Officer Carl Liebert, and other bank board members.

Last fall, USAA announced it was doubling its charitable giving in San Antonio and elsewhere. But in January, the financial services provider to the military made headlines for declining to offer low-interest loans to federal employees affected by the government shutdown. USAA responded by making a $15 million donation to aid Coast Guard service members.

A 2018 Bank RepTrak study ranked USAA Bank as the most reputable bank among customers and non-customers. The study, a partnership between Reputation Institute and American Banker, first ranked USAA in 2017, when it came in first among customers and second for excellent overall reputation in the United States.

Shari Biediger has been covering business and development for the San Antonio Report since 2017. A graduate of St. Mary’s University, she has worked in the corporate and nonprofit worlds in San Antonio...

11 replies on “USAA Bank Under Orders to Correct Unsound Banking Practices”

  1. Yup, USAA Bank has take its lumps lately, and deservedly so. The government shutdown response was pitiful, and the $15 million donation to Coast Guard Mutual Assistance was an awkward attempt to divert attention. Here’s hoping they’ve gotten the message and will tighten things up.

    1. USAA also offer a less than 1% interest rate on the loan. It is banking regulations like these that drove the change. A large bank, as they’re now classified, cannot give away loans.

  2. Will this compell them to refund the money to me that they allowed several scumbags to have access to? Then address the issue by freezing my accounts and take FROM ME the exact amounts they allowed these crooks to withdraw from my accounts? Will it make them be transparent about what actually happened? Will it urge them to comply with the POA I registered with them giving my attorney power over the situation? Will they finally send the Broward County Sheriff’s Office the information that was subpoenaed to try and resolve the case on our end? No…this just gives them a heads up that people are onto their shady and deceptive practices. And it allows them to correct those actions with no actual consequences.

  4. Wait wait. Who the heck did they pay these large sums of money to and why does it go to them rather than someone else (I.e. the people they’ve supposedly violated)? Seems to be they should just be fixing the problems rather than stimulating some government agency’s revenue, no?

  5. Not sure how much the bank contributes to USAA’s bottom line, but insurance is its core business. Maybe it should never have gotten into the banking business?

    1. I’ve been a USAA member for over 20 years now, and have never encountered anything other than stellar service, until the past few months. In the past, my family and I have utilized most of the services they offer, without any incident. Even now, the only issue I can truly complain about is it being such a lengthy process to open up my daughter’s checking account last month. I was literally on the phone verifying information on her that should have been in the system already, since I had already applied her for membership when she was born in 2003. After reading this article, the lengthy and redundant questions regarding Homeland Security, Account Security and Citizenship verification all seem to make sense now. Hopefully things will ease up somewhat and those who have been affected, will be compensated as deserved and move forward to enjoy all of the Membership Perks! Best wishes to all!

  6. From my understanding, USAA only recently crossed the size threshold to be subject to these kinds of regulations. Unfortunately, headlines and P/R tidbits don’t typically capture the complexity and reality of these sorts of situations.

  7. I lost my husband in November; he was a 47 year member. NOW FOR OVER THREE MONTHS, they have yet to transfer his money to my account. I discovered quite by accident that they opened a second account in my name without my knowledge and without beneficiaries. Illegal!!! Several more irregularities have occurred. Now I must hire a lawyer to retrieve all of my husband’s checking, savings, annuities, etc., accounts.
    DO NOT PUBLISH – YET.

  8. I’ve been with USAA since I join Army in 1986.
    And to this day still can’t get personal loan from USAA to remodel my home or purchase a used vehicle.
    ??? Always having to look eles where for home improvement loan

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