PNC Bank 2015 Annual Report Download - page 221

In its Statement of Claim, which the liquidator served in July
2015, the liquidator alleges, among other things, that GIS
Europe breached its contractual duties to DD Growth as well
as an alleged duty of care to DD Growth, and to investors in
DD Growth, and makes claims of breach of the administration
and accounting services agreement, breach of the middle
office agreement, negligence, gross negligence, and breach of
duty. The statement of claim further alleges claims for loss in
the net asset value of the fund and loss of certain subscriptions
paid into the fund in the amounts of $283 million and $134
million, respectively. The statement of claim seeks, among
other things, damages, costs, and interest.
Other Regulatory and Governmental Inquiries
PNC is the subject of investigations, audits and other forms of
regulatory and governmental inquiry covering a broad range of
issues in our banking, securities and other financial services
businesses, in some cases as part of reviews of specified
activities at multiple industry participants. Over the last few
years, we have experienced an increase in regulatory and
governmental investigations, audits and other inquiries. Areas
of current regulatory or governmental inquiry with respect to
PNC include consumer protection, fair lending, mortgage
origination and servicing, mortgage and non mortgage-related
insurance and reinsurance, municipal finance activities, conduct
by broker-dealers, automobile lending practices, and
participation in government insurance or guarantee programs,
some of which are described below. These inquiries, including
those described below, may lead to administrative, civil or
criminal proceedings, and possibly result in remedies including
fines, penalties, restitution, or alterations in our business
practices, and in additional expenses and collateral costs.
• One area of significant regulatory and governmental
focus has been mortgage lending and servicing.
Numerous federal and state governmental, legislative
and regulatory authorities are investigating practices
in this area. PNC has received inquiries from, or is
the subject of investigations by, a broad range of
governmental, legislative and regulatory authorities
relating to our activities in this area and is
cooperating with these investigations and inquiries.
As a result of the number and range of authorities
conducting the investigations and inquiries, as well as
the nature of these types of investigations and
inquiries, among other factors, PNC cannot at this
time predict the ultimate overall cost to or effect on
PNC from potential governmental, legislative or
regulatory actions arising out of these investigations
and inquiries.
• In April 2011, as a result of a publicly-disclosed
interagency horizontal review of residential
mortgage servicing operations at fourteen
federally regulated mortgage servicers, PNC
entered into a consent order with the Board of
Governors of the Federal Reserve System and
PNC Bank entered into a consent order with the
Office of the Comptroller of the Currency.
Collectively, these consent orders describe
certain foreclosure-related practices and controls
that the regulators found to be deficient and
require PNC and PNC Bank to, among other
things, develop and implement plans and
programs to enhance PNC’s residential mortgage
servicing and foreclosure processes, retain an
independent consultant to review certain
residential mortgage foreclosure actions, take
certain remedial actions, and oversee compliance
with the orders and the new plans and programs.
In connection with these orders, PNC established
a Compliance Committee of the Boards of PNC
and PNC Bank to monitor and coordinate PNC’s
and PNC Bank’s implementation of the
commitments under the orders. PNC and PNC
Bank are executing Action Plans designed to
meet the requirements of the orders. Consistent
with the orders, PNC also engaged an
independent consultant to conduct a review of
certain residential foreclosure actions, including
those identified through borrower complaints,
and identify whether any remedial actions for
borrowers are necessary.
In early 2013, PNC and PNC Bank, along with
twelve other residential mortgage servicers,
reached agreements with the OCC and the
Federal Reserve to amend these consent orders.
Pursuant to the amended consent orders, in order
to accelerate the remediation process, PNC
agreed to make a payment of approximately $70
million for distribution to potentially affected
borrowers in the review population and to
provide approximately $111 million in additional
loss mitigation or other foreclosure prevention
relief, which could be satisfied pursuant to the
amended consent orders by a variety of borrower
relief actions or by additional cash payments or
resource commitments to borrower counseling or
education.
In June 2015, the OCC issued an order finding
that PNC Bank had satisfied all of its obligations
under the OCC’s 2013 amended consent order
and terminating PNC Bank’s 2011 consent order
and 2013 amended consent order. The OCC
retained jurisdiction over the distribution of
remaining funds contributed by PNC Bank under
its 2013 amended consent order. PNC’s consent
order with the Federal Reserve, as amended,
remains open and does not foreclose the
potential for civil money penalties from the
Federal Reserve. The range of potential penalties
communicated to PNC from the Federal Reserve
in connection with the consent orders is not
material and we do not otherwise expect any
additional financial charges from the Federal
Reserve consent orders to be material.
The PNC Financial Services Group, Inc. – Form 10-K 203