Actually, did Fifth Third get screwed with its pants on by the CFPB?

Admitting to one’s past errors may be considered passé by Ohio Republicans these days (ahem, JD Vance). But here at Buckeye Briefing, we’re willing to admit when we got it wrong. We’re also willing to credit the mainstream media when they dig up really good dirt.

And it appears that the good folks at the Cincy Enquirer have done exactly that in relation to federal regulators’ moves to attack Ohio’s very own Fifth Third.

Aggressive sales quotas. Lax internal oversight. Little consideration for customers whose whose financial well-being was compromised and whose complaints were disregarded by employees chasing financial incentives.

That’s the unflattering picture painted by court and other documents filed by federal regulators of Fifth Third Bank, the largest Cincinnati-based bank and one of the region’s Fortune 500 companies.

[…]

Yet, the documents also reveal federal regulators were having difficulties in their fake accounts investigation: A U.S. District Court judge had doubts they found evidence to prove unauthorized activity.

Regulators did not identify any alleged victims of Fifth Third’s disputed practices. The Enquirer’s attempts to find affected consumers in the case were unsuccessful.

[…]

Regulators believed there were more than 1,100 unauthorized accounts and indicated they suspected potentially much more. In court documents, Fifth Third believed there might have been “fewer than 2,000” out of more than 10 million accounts opened during the 2010 to 2016 period.

Regulators did not identify any Fifth Third customers who were victimized by fake accounts in the case. Attempts by The Enquirer to identify any alleged victims of the fake accounts or “junk” auto insurance were unsuccessful. Part of regulators’ settlement with Fifth Third tasks the bank with identifying remaining victims affected by the case.

Court and regulatory filings also don’t mention if the agency discovered any of the bankers allegedly opening bogus accounts or any legal action against individuals.

[…]

Regulators didn’t spell out the origin of their case against Fifth Third, but their complaint said Fifth Third knew as early as 2010 their sales culture might be contributing to fraud by employees. A senior Fifth Third executive in Chicago warned superiors there were problems that year.

The unnamed executive wrote: The bank’s “leadership team has a reputation of less than desirable sales management practices” and that “bullying and threats are often used to achieve results.’” The bank executive also noted: “There have been consistent problems around unauthorized credit card sales.”

In court documents, Fifth Third accused regulators of using a “selective quote” to make its case.

“In 2010, Fifth Third identified a few instances of employees in Chicago opening accounts without authorization … The bank investigated the allegations at the time, remediated the affected consumers, disciplined employees who engaged in wrongdoing, including termination and appointed new management to lead the Chicago region,” the bank said.

Fifth Third accused regulators of leveling “sweeping allegations (that) amplify and distort a handful of limited, historical, and already remediated instances of misconduct.”

Fifth Third also pointed out an issue that affected the CFPB’s case: Several of the misdeeds the regulators were pursuing took place before the agency existed or had enforcement authority. The agency was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and began operations in July 2011.

Among several court skirmishes, the court sided with Fifth Third saying regulators couldn’t pursue alleged misdeeds that predated its authority.

Still, regulators pressed ahead.

Regulators noted thousands of accounts that were opened then closed within days, weeks or months and credit cards that were ordered but never activated, arguing it indicated widespread shenanigans.

In its court filings, Fifth Third pushed back: That wasn’t evidence of unauthorized accounts, simply customers changing their minds. For example, the bank noted industry research showed as many 35% of consumers don’t activate new credit cards.

[…]

Trying to get a handle on the number of potential bogus accounts, the court ordered both sides to analyze a sample of 3,900 accounts during the period under scrutiny. After reviewing the results, U.S. Judge Douglas Cole, a 2019 Trump appointee, expressed concern that regulators had found accounts that may or may not have been unauthorized but no proof.

“It doesn’t look like the CFPB has to date made any progress to where they could say whether any … accounts … are in fact unauthorized or not,” Cole said during a hearing. “I don’t think right now there’s evidence that would support a finding that these were unauthorized accounts.”

So: CFPB pursued a case relating to actions that allegedly occurred before the CFPB even existed, let alone was empowered to conduct these kinds of investigations and actions. It pursued this case without any actual evidence of wrongdoing, and to this day, no one can find anyone who was actually harmed by the alleged actions. Fifth Third basically paid CFPB to get off its back, sort of like a business might pay a mafia protection racket. And now, the bank is being name-checked alongside Wells Fargo (which, we can personally attest did open at least one account that we personally know of without the account owner’s authorization) because it made a financially and legally smart, but reputationally stupid, move to stop the CFPB harassment.

That’s quite an indictment of one of the agencies most loved by Democrats, and Sherrod Brown, especially.

Go read the whole Enquirer story here.