Couple still waiting for bank to return balance of insurance check - Bank of America $BAC Bank Run?

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It's important that you read this article out of my local paper carefully to understand what is going on..

The article below is about the fact that many people in Joplin are having a hard time getting banks, especially Bank of America, to turn over the insurance money due them.

The couple discussed received a $232,397.55 check from their insurance company promptly after their home was destroyed by the disastrous May 22nd tornado which destroyed a full 30% of our town and affected virtually everyone within it.

The owners of the home are in a big hurry to payoff their loan balance and move on with their life. Make plans for the future, etc.

This couple is owed $178,000 after paying off their outstanding mortgage debt. Apparently they were well insured.

As I said, they received the money they were due promptly from their insurance company so what's the problem?

Bank of America has been dragging their feet about sending the $178,000 check for many weeks now..

The the attorney general's office had this to say "We consider five to seven days to be reasonable processing," said Gonder in the attorney general's office. "If it goes past that, we encourage residents to call, and we will intervene."

As I said they have been waiting weeks and still have not received their money from Bank of America.

So I got to wondering why that would be.. How would it be advantageous for Bank of America to delay sending this money to it's rightful owner?

The first thing(s) that popped into my head were things like.. Well the delay is so Bank of America can "use" the money a little bit longer, to draw interest on it as a deposit or whatever.

Then something dawned on me..

Could what has happened here in Joplin Missouri (ie; the May 22nd tornado) be causing a "bank run" to occur?

Because we use something called Fractional Reserve Banking (see here and here) the available funds at a bank (called bank reserves) are only a fraction (called the reserve ratio) of the quantity of deposits at the bank.

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Excerpt from the story..

After sending the check to California, Cindy Atteberry was notified by Bank of America that she had to declare in writing what she intended to do with the money that wasn't going toward paying off her mortgage.

"That's ridiculous," Cindy Atteberry said. "It's none of their business. And I told them that. They told me it would take 14 days to process my check. That's ridiculous, too."

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So my question is this..

Could the 3 billion dollars in damage from the May 22nd tornado be causing an unexpected bank run at many of the nation's largest banks as they are required to pay these insurance checks?

And lets not forget that Bank of America IS bankrupt.. Owned by the U.S. government and tax payers..

Just wondering in Missouri..

Full story below and link provided

Thanks

Greg

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July 9, 2011
Couple still waiting for bank to return balance of insurance check
By Laura Kelly
news@joplinglobe.com

JOPLIN, Mo. When Cindy and Curtis Atteberry were rescued from their basement May 22 and saw that their home and everything in it was gone, they felt lucky. They were alive. They were insured.

Seven weeks later, Cindy Atteberry is frustrated. Angry. Outraged. And she has plenty of company.

At least 40 Joplin property owners have filed complaints with the Missouri attorney general's office, most about mortgage companies holding on to large insurance checks.

"And we assume there are others who have not contacted this office," said Nancy Gonder, spokeswoman for Attorney General Chris Koster.

State Sen. Ron Richard, of Joplin, said his office had also received complaints, "especially about Bank of America."

Cindy Atteberry, who knows something about finances, she's president and CEO of Joplin Metro Credit Union, says she's not just fighting for herself but for others in her community who won't or don't know what they should do.

"They are holding my money, using my money," she said. "That's my money. Why are they doing this to us? Don't they know this is a national disaster?"

HEADACHES

When the weather looked threatening that Sunday afternoon in May, Curtis and Cindy Atteberry went down to the basement of their tri-level home with their two little dogs "just in case."

When they saw the patio furniture flying by the window, they ran for a closet. Curtis Atteberry fought unsuccessfully with the wind to close the door, and "we felt things just swell up," said Cindy Atteberry, "like it was going to pull us out of there."

When it was all over, the stairwell was full of who-knows-what. One of the dogs was missing. People above helped free the couple from the rubble.

"One of my first thoughts was: "I hope to God I'm well insured,"" she said.

She was. And the company came through, she said, even driving the $232,397.55 check up from Texas to make sure it found the Atteberrys at their temporary home outside Joplin.

Cindy Atteberry, 57, was eager to pay off what she owed on the property that was once her home and figure out what she and Curtis, 63, would do next. The quicker she could get that check processed, the better. That's when the headaches really started, she said.

She was told the check couldn't be handled at the local Joplin Bank of America branch; it had to be sent to Simi Valley, Calif. In the case of the Atteberrys check, records and statements show that Bank of America moved at its own pace, and often in 14-day windows.

"We consider five to seven days to be reasonable processing," said Gonder in the attorney general’s office. "If it goes past that, we encourage residents to call, and we will intervene."

MORE DELAYS

After sending the check to California, Cindy Atteberry was notified by Bank of America that she had to declare in writing what she intended to do with the money that wasn't going toward paying off her mortgage.

"That's ridiculous," Cindy Atteberry said. "It's none of their business. And I told them that. They told me it would take 14 days to process my check. That's ridiculous, too."

But without a letter, the processing would be completely stalled.

Postal records provided by the Atteberrys to the Globe show that the envelope containing the letter of intent was signed for at Bank of America in Simi Valley on Wednesday, June 22; a worker at Bank of America later told Cindy Atteberry it wasn't received until nearly a week later, Tuesday, June 28.

Time passed.

On Tuesday, July 5, Cindy Atteberry was notified by phone that her loan would be paid off by that afternoon, some 14 days after she says the letter of intent arrived at Bank of America's Simi Valley office, and that the balance of the money would be mailed to her July 19, another 14 days later.

It was then that Cindy Atteberry decided she needed help. She contacted the attorney general's office and Richard, chairman of the Senate Interim Committee on Natural Disaster Recovery. Both looked into her situation.

On Thursday, July 7, the mortgage payoff had still not been made.

Cindy Atteberry was angrier than ever after opening a manila envelope with a July 1 California postmark.

It contained a smaller, self-addressed return envelope that she'd sent along with the insurance check, so Bank of America could mail a new check to her. The envelope was empty.

There was no letter of explanation.

"Someone went to all the trouble to get a manila envelope?" Cindy Atteberry said. "To mail an empty envelope? Are you kidding me?"

Her voice rose as she displayed the empty envelope.

A SUDDEN CHANGE

But she also got a message that day, July 7, from a woman in property claims at Bank of America, asking for a call back.

The automated phone system doesn't make it easy to return a phone call from an employee in Bank of America's property claims office, but Cindy Atteberry eventually connected with the woman who wanted to talk with her.

"She apologized for the way I had been treated," Cindy Atteberry said. "She said that's not how they want to do business."

Cindy Atteberry said the caller also told her that the money still owed to the couple after the mortgage payout, about $178,000, would be expedited and sent by overnight delivery.

Contacted by the Globe by phone on Friday, the woman in Bank of America's property claims office said she couldn't talk and referred questions to the media relations office. A Bank of America spokeswoman said out-of-state "researchers" would have to look into the case before any response could be made. She had no comment about Bank of America's general business practices, or the attorney general's five-- to seven-day time frame for "reasonable" turnaround on checks.

Cindy Atteberry checked her voice mail and email Friday for the tracking number she said the woman on the phone told her she'd receive after the check was shipped. She didn't hear from Bank of America.

The following statement was sent from Bank of America to a Joplin Globe reporter in response to questions about the Atteberry's experience, check processing times, and comments contained in this story from the Missouri attorney general's office and Richard, the state senator:

"We understand that a natural disaster such as this can be difficult for everyone who is impacted by it, as the Atteberrys were. Generally, it takes approximately 14 days from the date we receive the letter of intent from the homeowner to process the check request. In this case, we received the Atteberry's letter on June 28, and completed the check request on July 7. The actual check should be sent as early as Monday."

The statement did not address the bank-signed June 22 date of delivery or the comments from the state officials.

TRACKING COMPLAINTS

The Missouri Senate Interim Committee on Natural Disaster Recovery chaired by Richard comprises three subcommittees, including insurance response. Preliminary reports are due to him by Sept. 14.

In the meantime, Richard said he and his staff are working to stay on top of things as they develop, especially complaints like Cindy Atteberry's. "Most of those have been resolved with a phone call" from his office or the state attorney general's office, he said.

Perhaps it's not surprising that some companies have been slow in their handling of paperwork and funds, Richard said.

The May 22 tornado directly affected more than 30 percent of Joplin, causing estimated damage of as much as $3 billion.

"There is no textbook for a disaster like this," Richard said. "Still, that is no excuse."



Complaints

To file a complaint with the Missouri attorney general’s office: http://ago.mo.gov/consumercomplaint.htm.