Citizen Bank Financial Collapse

The Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Controller of the Currency (OCC) through a joint investigation issued fines against Citizens Bank and its affiliates for allegedly failing to credit consumers for the full amounts of their deposited funds.

Citizens Bank kept money from deposit discrepancies when receipts did not match actual money transferred. The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference.

First, The CFPB investigation revealed that from January 1, 2008 to November 30, 2013, Citizens Bank violated the Dodd-Frank Wall Street and Consumer Protection Act by failing to properly credit consumers’ checking and savings accounts. Due to ineffective scanners, Citizens Bank shorted consumers millions of dollars by failing to address mistakes in which the bank’s scanner misread either the deposit slip or the checks provided by consumers, but when the error was reported, the bank chose to ignore the mistake and only corrected for people where the discrepancies were as large as $50.

Second, The CFPB found that not only Citizens Bank failed to credit consumers the full amount of their deposits, the bank falsely claimed that it would verify deposits. Citizens Bank and its affiliates failed to provide accurate information and protection for those most vulnerable in the society: the consumer. Because of their unfair business practices, The CFPB consent order required the bank to provide approximately $11 million in refunds to consumer in addition to $20.5 million in federal penalties. Various civil penalties and restitution were added later on. Also, the coordinated activity between the CFPB, the OCC and the FDIC should be noted. The CFPB is following up on their promise to coordinate their investigations and enforcement activity with other regulatory bodies to prevent another financial crisis. The bank agreed to properly review its compliance management system to ensure no further violations relating to its processing of deposits, it must not misrepresent its processing practices, and it must incorporate corrective actions if the bank fails to process deposits consistent with federal consumer financial law.

In conclusion, I would say that for years leading up the 2008 financial collapse, federal bank regulators ignored numerous warnings of increasingly predatory mortgage practices, credit card tricks used by bank to gain the system. In response for the problems caused by those predatory practices, the Dodd-Frank Wall street Reform and Consumer Protection Act of 2010 included a major reform demanded by the public: The Consumer Financial Protection Bureau. Its laws are designed to protect the rights of the consumers and ensure businesses maintain the integrity of the financial system.