I am hearing and reading stories that suggest that banks are not following the new credit card rules, particularly as they refer to the timely application of payments. One of the “gotcha” tricks of credit card banks is to hold check payments for several days before processing them, in order to generate more late fees. This is now specifically illegal, but banks are still doing it.
The White House earlier this week considered the merits of a nationwide mortgage moratorium, only to conclude that such an action was not needed and might be counterproductive.
Some banks knew they were in trouble with foreclosure error even before the current scandal broke. JPMorgan, for example, set aside about a third of its quarterly profit to cover future legal and administrative costs and compensation, and spent much of its earnings call defending its foreclosure process.
Three Countrywide executives reached a settlement with the SEC today. Angelo Mozilo will pay $22.5 million as a penalty along with a forfeiture of twice that amount. The latter sum, though, will be paid by Bank of America, which bought Countrywide after its collapse. David Sambol and Eric Sieracki also settled, and will pay penalties of less than $1 million. With the settlement, a jury trial that would have started on Tuesday will not go forward.
Banks failed tonight in Missouri and the neighboring state of Kansas. The banks’ deposits and assets were transferred to nearby banks. The largest was Premier Bank, with 8 locations in Missouri and one in Grapevine, Texas, and $1 billion in deposits. Premier Bank owned more than $100 million in foreclosed real estate projects. It had been losing money for some time, and its remaining equity had vanished earlier this year. The successor is Providence Bank, which is purchasing 56 percent of the failed bank’s assets.
Also closed tonight, Security Savings Bank had nine branches in eastern Kansas and $397 million in deposits. It had missed an August 31 deadline to raise capital. The successor is Simmons First National Bank.
The other Missouri bank failure tonight was WestBridge Bank and Trust, with its office in Chesterfield, Missouri. It had $72 million in deposits. It had been in business just since 2006, and had spent a significant part of its initial $12 million in capital to build the building where it operated. It reported a loss of $3 million in 2008, and the losses continued. A deal to sell the bank to investors for less than $1 million was approved by stockholders last summer, but fell through after the would-be buyers reviewed the bank’s assets. The successor is Illinois-based Midland States Bank.