Banks, Lawsuits, and Settlements: What’s going on with Banks?

This week I noticed several headlines that amount to bad news for big banks.

I will give you my honest gut-reaction when first reading these headlines:

1. CommerceWest Bank Admits Bank Secrecy Act Violation and Reaches $4.9 Million Settlement with Justice Department  (see Link)

Violating the Bank Secrecy Act? Really? That just sounds bad…

CommerceWest Bank was also accused of violating other Federal Laws – check out the Complaint here

2. Chase Bank to Pay $50 Million for Mishandling Bankruptcy Docs (see Link)

Mishandling bankruptcy docs? These people are already broke, why not bilk them for extra fees?

The Department of Justice gave some insight on the nature of the allegations:

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” says Stuart F. Delery, acting associate attorney general, in the release. “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.” 

3. HSBC Bank to Pay $30 Million to Settle Overdraft Fee Lawsuit (see Link)
Gouging customers. Nice…

Two thoughts after my review of these articles:

1. The Department of Justice is out there holding Big Banks Accountable. 

Someone has to. It’s not going to be the average consumer, with a mortgage loan. It’s also not going to be  the small business owner taking out a construction loan.   Big Banks have the leverage.

2. Local Community Banks are More Appealing Than Big Banks.

Consumers and businesses alike are looking for banks they can trust. From a personal point of view, as a lawyer and an advisor to business owners – I’m looking to make referrals to clients that I trust.

Looking at the news headlines, an average individual  or small business owner might conclude that they need a local banking relationship they can trust.

In West Michigan there are a lot of good local community banks. I know good commercial lenders who care about their business clients.

Does this mean that big banks are going away? Nope.

As its been said – some of the largest banks are simply able to offer better deals at lower risks.

Regardless, the headlines certainly give you pause to think.

Questions? Comments?

email: Jeshua@dwlawpc.com

http://www.dwlawpc.com