TCF Bank 2012 Annual Report Download - page 27

services and products it may offer or increase the ability
of non-banks to offer competing financial services and
products, among other things. Additionally, while TCF has
policies and procedures designed to prevent violations of
the extensive federal and state regulations it is subject
to, there can be no assurance that such violations will not
occur, and failure to comply with these statutes, regulations
or policies could result in sanctions against TCF by regulatory
agencies, civil money penalties and reputational damage,
any of which could have a material adverse effect on its
financial condition and results of operations.
Further, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “Patriot Act”), the Bank
Secrecy Act and similar laws require financial institutions
to develop programs to prevent them from being used for
money laundering and terrorist activities. If such activities
are detected, financial institutions are obligated to file
suspicious activity reports with the U.S. Treasury’s Office of
Financial Crimes Enforcement Network. These rules require
financial institutions to establish procedures for identifying
and verifying the identity of customers seeking to open new
accounts. Failure to comply with these regulations could
result in sanctions and possibly fines. In the past, several
financial institutions have received sanctions and some
have incurred large fines for non-compliance. On January
25, 2013, TCF entered into a settlement agreement with the
OCC related to TCF’s past compliance with the Bank Secrecy
Act of 1970 (“BSA” or the “Bank Secrecy Act”), pursuant to
which TCF agreed to pay a $10 million civil money penalty.
Violations of these regulations could have a material
adverse effect on TCF’s financial condition and results
of operations.
TCF’s earnings are significantly affected by
the fiscal and monetary policies of the federal
government and its agencies.
The policies of the Federal Reserve impact TCF significantly.
The Federal Reserve regulates the supply of money and
credit in the U.S. Its policies directly and indirectly
influence the rate of interest earned on loans and paid on
borrowings and interest-bearing deposits, and also affect
the value of financial instruments that TCF holds. Those
policies determine to a significant extent the cost of funds
for lending and investing. Changes in those policies are
beyond TCF’s control and are difficult to predict. Federal
Reserve policies can also affect TCF’s borrowers, potentially
increasing the risk that they may fail to repay their loans.
For example, a tightening of the money supply by the
Federal Reserve could reduce the demand for a borrower’s
products and services. This could adversely affect the
borrower’s earnings and ability to repay its loan. As a
result, changes to the fiscal and monetary policies by
the Federal Reserve could have a material adverse effect
on TCF’s financial condition and results of operations.
Proposed and future legislative and regulatory
initiatives may substantially increase compliance
burdens, which could have a material adverse
effect on TCF’s financial condition and results
of operations.
Future legislative and regulatory initiatives cannot be
fully or accurately predicted. Such proposals may impose
more stringent standards than currently applicable
or anticipated with respect to capital and liquidity
requirements for depository institutions. For example,
Congress enacted the Dodd-Frank Act in July 2010.
Uncertainty remains as to many aspects of its ultimate
impact, which could have a material adverse effect on the
financial services industry as a whole and, specifically, on
TCF’s financial condition and results of operations.
In addition, the Dodd-Frank Act created the Consumer
Financial Protection Bureau (the “CFPB”), which has
examination and enforcement authority over TCF Bank and
its subsidiaries, and gave it broad rulemaking authority to
administer and carry out the purposes and objectives of the
federal consumer financial laws with respect to all financial
institutions that offer financial products and services to
consumers. The CFPB is authorized to make rules identifying
and prohibiting acts or practices that are unfair, deceptive
or abusive in connection with any transaction with a
consumer for a consumer financial product or service, or
the offering of a consumer financial product or service. The
term “abusive” is new and untested, and TCF cannot predict
how it will be enforced.
Based on the provisions of the Dodd-Frank Act and
anticipated implementing regulations, it is highly likely
that banks and bank holding companies will be subject
to significantly increased regulation and compliance
obligations that expose TCF to noncompliance risk and
consequences, which could have a material adverse effect
on TCF’s financial condition and results of operations.
{ 2012 Form 10K } { 11 }