Sen. Warren asks bank regulator to reject TD’s $13.4 billion acquisition after customer-abuse report

Sen. Elizabeth Warren, D-Mass., speaks during the Senate Armed Services Committee hearing on security in Afghanistan and in the regions of South and Central Asia, in Dirksen Building on Tuesday, October 26, 2021.

The regulators were asked to block the acquisition of the U.S. bank by Toronto-Dominion because of customer abuse allegations.

In a letter sent Tuesday to the Office of the Comptroller of the Currency obtained exclusively by CNBC, Warren cited a May 4 report from Capitol Forum, a Washington-based investigative news outfit.

A Toronto-based bank is seeking regulatory approval for its acquisition of a Tennessee-based bank. The deal is part of a push by the CEO to expand in the American Southeast. In the past few years, banks have been swept up in a wave of consolidation in order to gain scale, cut costs and invest in technology to compete with megabanks.

Warren said that the OCC should block any merger between the two banks until they are held responsible for their abusive practices.

Workers could lose their jobs if they didn't meet their goals if they didn't use a point system and bonuses to encourage them to open customer accounts.

Workers were told to create four new accounts for each customer and open them even if they didn't want them.

One of the strategies cited by the news organization was faking reasons to call consumers fraud alert in the hopes of convincing them to open more accounts, opening new accounts rather than just replacing missing debit cards, and misrepresenting key aspects of overdraft programs to encourage their adoption. There were problems in branches from Florida to Maine.

The details of the Capitol Forum report could not be independently confirmed by CNBC.

A bank spokesman told CNBC that the allegations in the Capitol Forum piece were not true.

The bank said that their business is built on integrity and trust. We put our customers first and are proud of our culture of delivering legendary experiences to customers.

The bank objects to accusations of systemic sales practice issues or any other claims being made in the article.

The bank disagrees with the characterization of information presented as facts about the bank's fraud procedures. The security of our customers' accounts and personal information is a top priority at the bank.

According to the report, the former acting comptroller chose to privately reprimanded the company rather than publicly release its findings.

Noreika declined to speak to the Capitol Forum, but his employer, the white-shoe law firm Simpson Thacher & Bartlett, told the news outfit that he was not allowed to speak about the matter.

Keith Noreika, acting Comptroller of the Currency, speaks during a Senate Banking Committee hearing in Washington, D.C., U.S., on Thursday, June 22, 2017.

The decision by Mr. Noreika to allow the rampant fraud and abuse at the bank to go unaddressed has the potential to undermine the agency's authority and put consumer finances at risk. The Biden administration will scrutinize bank mergers more closely.

A request for comment was not responded to by theOCC.

The lawmakers asked the OCC to release the findings of its investigation into the company and to reconsider the penalties that should be imposed. The letter was signed by several people.

The First Horizon acquisition is expected to close by the first fiscal quarter of 2023, subject to approval from the U.S. and Canada. If the deal doesn't close by the end of the year, it will be scrapped.