Federal lawmakers seek to block TD Bank Group and First Horizon merger
Three federal lawmakers recently sent a letter to the U.S. Office of the Comptroller of the Currency, a federal banking regulator, asking them to block the $13.4 billion merger between Memphis-based First Horizon Corp. and TD Bank Group. .
U.S. Senator Elizabeth Warren, D-Mass. ; U.S. Representative Katie Porter, D-California; and U.S. Representative Jesús Chuy García, D-Ill. ; sent the letter to Acting Comptroller of the Currency Michael Hsu, citing a May 4 report from the Washington-based news outlet Capitol Forum regarding concerns about “abusive practices” by TD Bank Group, according to a press release.
“As TD Bank seeks your agency’s approval to increase its market share and become the sixth largest bank in the United States, the OCC should closely examine any ongoing wrongdoing and block any mergers until hold TD Bank accountable for its abusive practices,” the lawmakers wrote in the letter.
In the letter, federal lawmakers cited TD Bank’s use of a “points system” that incentivized employees to open as many accounts and push as many customers into overdraft protection as possible. Employees were threatened with losing bonuses or even fired if targets were not met, according to the letter.
First Horizon declined to comment for this story. TD Bank sent a statement to The Commercial Appeal on Wednesday evening.
“The allegations in the Capitol Forum article are unsubstantiated,” the statement read in part. “Our business is built on ethics, integrity and trust. At TD Bank, we put our customers first and pride ourselves on our culture of delivering legendary customer experiences. As part of routine and ongoing monitoring, TD Bank has not identified systemic issues with sales practices at any time.”
BANK MERGER:What could First Horizon executives get in ‘golden parachute’ payments in the TD Bank merger?
BANKING NEWS:What’s next for First Horizon after being acquired by TD Bank Group for $13.4 billion?
“Lawmakers urge Hsu to release the findings of a 2016-17 investigation by the Office of the Comptroller of the Currency (OCC) that allegedly uncovered bank misconduct, review any ongoing wrongdoing, and block any further merger until TD Bank is held accountable for its abusive practices,” a press release said.
Lawmakers in the letter also accuse President Donald Trump’s acting comptroller Keith Noreika of sweeping it under the rug and “allowing TD Bank to avoid liability.”
The letter also referenced the Wells Fargo account fraud scandal in 2016, where the bank was accused of creating millions of fraudulent savings and checking accounts without their customers’ consent. Lawmakers accused TD Bank of using “similar tactics”.
This news comes more than two weeks after First Horizon shareholders voted on May 31 in favor of a deal that would see the Memphis-based bank acquired by the Toronto-Dominion Bank.
The transaction is expected to close by TD’s first quarter of fiscal year 2023, November. The transaction will terminate, unless otherwise extended, if not completed by February 27, 2023.
If the transaction is completed, TD’s US franchise will become one of the top six US banks and significantly expand its presence in the Southeast.
In the United States, TD is said to have approximately $614 billion in assets and a network of 1,560 stores, serving more than 10.7 million customers in 22 states. TD Bank Group is reported to have $1.8 trillion in assets worldwide, with more than 2,600 branches serving 27.5 million customers worldwide.
Here is TD Bank’s full statement in response to the report:
“The allegations in the Capitol Forum article are baseless. Our business is built on ethics, integrity and trust. At TD Bank, we put our customers first and are proud of our culture of accountability. Delivering Legendary Customer Experiences Through routine and ongoing monitoring, TD Bank has not at any time identified any systemic issues with sales practices.
“Our compensation practices – which place a strong emphasis on customer satisfaction – are carefully and actively managed. We vehemently oppose any allegations of systemic sales practice issues or any other claims alleged in the article.
“In fact, the OCC reviewed sales practices at large and medium-sized national banks and federal savings associations from 2015 to 2018. As then-Comptroller Otting said in a letter to Senate Democrats in January 2018: “The horizontal review did not identify any systemic issues. with bank employees opening accounts without customers’ consent.
“Finally, we strongly disagree with the article’s characterization of the information presented as fact regarding TD Bank’s fraud procedures. At TD Bank, protecting the security of our customers’ accounts and personal information is a top priority. We follow industry best practices that are designed to detect and help prevent fraud.”
Omer Yusuf covers the Ford Project in Haywood County, residential real estate, tourism and banking for The Commercial Appeal. He can be reached by email [email protected] or followed on Twitter @OmerAYusuf.