5/21/2018 Out-Of-court Settlements With Errant Banks is
Financial Services Industry on a Dying Path
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Out-of-court settlements with errant banks: Is
financial services industry on a dying path?
Banks are at the receiving end-
August 25, 2014The reports coming from global nancial markets
are not good for banks atall! Banking regulators have rene"ed their
"ar against "hom the# perceiveas errant banks! The la" enforcement
agencies in their respective countriestoo have $oined them as
allies in this onslaught! This time it is not smallbanks "hich the#
have captured in their nets! %t is big banks the# have
netted proclaiming &no bank is too big to $ail', the
alternative version of thepopular dictum &some banks are too
big to fail'!
This
sudden onslaught of banks b# both regulators and prosecutors
has
shattered the foundation, long believed to be rm and strong, of
the
banking industr#! Banks too admitting their guilt have started
to arrange for
&out-of-court settlements' to avoid eventual bigger losses!
(ne b# one, all
leaders in the industr# have added to their collection of
nes,
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5/21/2018 Out-Of-court Settlements With Errant Banks is
Financial Services Industry on a Dying Path
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compensator# pa#ments and lump sum customer protection charges!
%n the
process, banks have got out of a mess# situation! But, no amount
of
compensator# pa#ments can restore them "ith lost credibilit#,
trust and
reputation "hich are the core pillars of a sound banking
industr#!
An out-of-court settlement "ith a price tag of ) 25 b
According to *ational Association of Attorne#s +eneral or
*AA+ an association of . /rosecutors set up in 10 the
latest out-of-court settlement has forced ve leading banks
to
pa# as much as ) 25 billion available at3
http3naag!orgstate-attorne#s-general-feds-reach-25-billion-
settlement-"ith-ve-largest-mortgage-servicers-on-
foreclosure-"rongs!php! The ve banks under attack b# .
/rosecutors have been the largest in the "orld3 Bank of
America, 6 / 7organ 8hase, 9ells :argo, 8itigroup and All#
:inancial! These banks for "rongs done to homeo"ners b#
taking over their homes "hen the# "ere unable to repa# their
loans kno"n in industr# as &foreclosure' have agreed to
set
aside ) 25 billion as compensation as follo"s3
nA minimum of ) 1 billion "hich can go up to ) ;2 billion b#
"a# of direct relief to borro"ers including the reduction of the
principal sum
of the loan
