Citizen Bank Financial Collapse

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

Citizen Bank Financial Failure

Citizens Bank kept money from deposit discrepancies when receipts did not match the actual money transferred. The bank chose to ignore these discrepancies and harmed many consumers by pocketing the difference. The CFPB investigation revealed that from January 1, 2008, to November 30, 2013, Citizens Bank violated the Dodd-Frank Wall Street Reform 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. When the error was reported, the bank chose to ignore the mistake and only corrected discrepancies that were as large as $50.

The CFPB found that not only did Citizens Bank fail to credit consumers the full amount of their deposits, but the bank also falsely claimed that it would verify deposits. Citizens Bank and its affiliates failed to provide accurate information and protection for the most vulnerable in society: the consumer. As a result of their unfair business practices, the CFPB consent order required the bank to provide approximately $11 million in refunds to consumers, in addition to $20.5 million in federal penalties. Various civil penalties and restitution were added later on. This case exemplifies the importance of regulatory bodies like the CFPB, OCC, and FDIC working together. The CFPB is following up on its promise to coordinate investigations and enforcement activities with other regulatory bodies to prevent another financial crisis. The bank agreed to properly review its compliance management system to ensure no further violations related to its processing of deposits. It must not misrepresent its processing practices and must incorporate corrective actions if it fails to process deposits consistent with federal consumer financial law.

Conclusion

In conclusion, for years leading up to the 2008 financial collapse, federal bank regulators ignored numerous warnings of increasingly predatory mortgage practices and credit card tricks used by banks to manipulate the system. In response to the problems caused by these 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 consumers and ensure businesses maintain the integrity of the financial system. This case against Citizens Bank serves as a reminder of the ongoing need for vigilance and regulatory oversight in protecting consumer interests and maintaining financial stability.

References

• Consumer Financial Protection Bureau. (n.d.). Enforcement actions. Retrieved from https://www.consumerfinance.gov/enforcement/actions/
• Federal Deposit Insurance Corporation. (n.d.). Press releases. Retrieved from https://www.fdic.gov/news/press-releases/
• Office of the Comptroller of the Currency. (n.d.). News releases. Retrieved from https://www.occ.gov/news-issuances/news-releases/
• U.S. Congress. (2010). Dodd-Frank Wall Street Reform and Consumer Protection Act. Public Law 111-203.