The Downfall of USAA, a 100-Year-Old Service Members Organization

A joint investigation by *American Banker* and the *San Antonio Current* in December 2024 details the numerous problems facing USAA and how the bank and insurer is currently “navigating a minefield of its own making.” However, one aspect that often goes unmentioned is the effect that Diversity, Equity, and Inclusion (DEI) and Environmental, Social, and Governance (ESG) initiatives seem to have had on its downfall.

### Regulatory Failures and Customer Complaints

Yahoo Finance reports that USAA has been penalized for charging military members higher interest rates than federal law allows. Due to this and other violations, regulators failed USAA twice in a row on the Community Reinvestment Act (CRA) exam, which measures how well banks serve their communities. This exam is one most banks pass easily, so these failures, in 2020 and again in 2023, point to “a fundamental breakdown” at USAA, according to Adam Rust, director of financial services at the Consumer Federation of America.

“What’s especially shameful about it is that they’re serving service members who deserve better,” Rust added.

Even more alarming, customers reported losing thousands of dollars due to mysterious deposits and withdrawals, according to a report from News 4 San Antonio. Some customers claim they were even asked to cover negative balances on their accounts after their money was stolen.

### Internal Struggles and Compliance Breakdown

There appears to be a significant lack of cohesiveness within the organization. Three former compliance employees, speaking anonymously to *American Banker* and the *San Antonio Current*, described the compliance department as struggling under immense pressure with a lack of openness to improving processes. They noted that initiatives were “either falling through the cracks or just getting roadblocked.”

USAA, which serves millions of military members and their families with competitive rates on insurance, banking, and investment services, has reportedly been in decline since Wayne Peacock was hired in 2020. Peacock, the first non-veteran CEO, began his tenure during the pandemic and prioritized ESG compliance over USAA’s military heritage.

Disturbingly, this shift allegedly contributed to a series of negative events, including reported suicides and increased hiring of H-1B visa holders. In 2023 alone, USAA received 417 formal complaints. Following this tumultuous period, CEO Wayne Peacock and several senior managers are retiring — but many question whether it is already too late to reverse the damage caused by what some describe as “left-wing” management since 2020.

### Ignored Warnings and Illegal Practices

Lenn Ferrer, a former USAA director of compliance, revealed in 2022 that senior executives ignored repeated warnings from third-party consultants and compliance staff for years. These executives knowingly disregarded notices of violations related to federal banking laws and regulatory authorities.

USAA allegedly concealed illegal practices, including violations of the Servicemembers Civil Relief Act (SCRA), the Military Lending Act (MLA), and other consumer lending regulations.

### The Unspoken DEI and ESG Problem

USAA’s aggressive focus on Diversity, Equity, and Inclusion (DEI), Corporate Social Responsibility (CSR), and Environmental, Social, and Governance (ESG) metrics has become a grave concern for many of its members.

In 2023, Scott Sturman wrote in *American Thinker* about the extreme influence DEI and ESG have had on USAA, highlighting how these policies have damaged the company. The CEO hired in 2020, Wayne Peacock, reportedly continues to prioritize these initiatives.

During the COVID-19 pandemic, USAA accelerated its implementation of ESG and DEI policies while quietly reducing its senior veteran full-time employee (FTE) headcount. The company’s demographics now show 52% female employees and a majority identifying as Democrats. Minorities constitute 49% of the workforce and 35% of executives.

USAA has a diversity score of 9.8 — a number some critics argue correlates with a lack of organizational cohesiveness. There is growing concern that hiring decisions at USAA prioritize characteristics related to DEI rather than merit.

—

The ongoing challenges at USAA underscore the complex intersection of regulatory compliance, organizational culture, and external social initiatives. For a company dedicated to serving military members and their families, critics argue it must refocus on its core mission and values to repair trust and stability.
https://www.independentsentinel.com/the-downfall-of-usaa-a-100-year-old-service-members-organization/