Ask the corporate bank manager

Miscellaneous and Personal Stuff I Must Share
1

The title says it all. I’m a manager at a large U.S.-based corporate bank. These days, I head up systems analysis for the credit card service division, but I started as a telephone customer service rep for retail products (checking, savings, CDs, non-mortgage lending and credit cards) and online banking. You’ll therefore find that I’m the least “corporate” corporate mofo you’ll ever encounter.

I’m starting this thread because, in my experience, there seems to be a lot of confusion about what exactly goes on with retail banking systems and practices, and many people aren’t sure whom to ask…after all, the telephone banker or branch manager may seem like nice people, but they may not be eager (or able, under corporate rules) to tell you you’re about to be smacked with a $30 fee, and explain the reasons why. I’ll be happy to answer any questions about the daily workings of banks in general, different types of accounts, transaction postings, customer service, and (my impressions of) the reasoning behind why banks do things the way they do.

I’m not affiliated with my company’s Securities or Mortgage divisions, so I’m afraid I won’t be much help with anything related to brokerages or real estate banking. Other than that, feel free to ask me anything you’d like. If you’ve ever gotten off the phone with your bank feeling thoroughly confused and unsatisfied, or if you’re just curious what exactly the “big boys” are doing with your money, post your inquiry here and I’ll answer as best I can. Ask away!

2

Okay, I’ve got one for you.

I paid OFF my crediti card at the beginning of March, 15 days before the billing cycle ended. In fact, I had one a one dollar credit. This card is in fact closed and cannot be used, so imagine my consternation when I see a charge for $16.44 that’s due this month. The charge is for some credit protection plan that I NEVER authorized. I called to get all this squared away and was treated rudely and like I was some kind of idiot. I was not allowed to speak to someone higher up.

I will pay the dumbass charge, but I want to know what, if any, recourse I have if I am billed again. This card is CLOSED, I cannot use it.

3

[QUOTE=Taters]
Okay, I’ve got one for you.

I paid OFF my crediti card at the beginning of March, 15 days before the billing cycle ended. In fact, I had one a one dollar credit. This card is in fact closed and cannot be used, so imagine my consternation when I see a charge for $16.44 that’s due this month. The charge is for some credit protection plan that I NEVER authorized. I called to get all this squared away and was treated rudely and like I was some kind of idiot. I was not allowed to speak to someone higher up.

I will pay the dumbass charge, but I want to know what, if any, recourse I have if I am billed again. This card is CLOSED, I cannot use it.
[/QUOTE]
Well, assuming you’re charged again, and assuming your bank’s customer service division continues to give you the runaround about dispute procedures and still refuses to escalate the issue, one of two things will happen. Either the charge on your account will fall beneath your bank’s write-off limit, in which case they’ll essentially just give up on billing you after three months of nonpayment, or else your account will be sent to Recovery/Collections. Once the latter happens, you are within your rights to request proof that the debt is owed before paying it. If the charge was never authorized, such proof will not exist.

That said, the above contains a lot of assumptions. I’m interested to know what sort of “protection plan” continues to bill a zero-balance, closed account. In all likelihood, I’d bet that what you saw was the final charge for service on the previous cycle, in which case you wouldn’t be charged again. I’d advise calling back to the customer service line until you get a satisfactory explanation of exactly what the charge is, why it was charged in the first place, and what you can do to stop it. If the bank is charging you, they can tell you why; if it’s a third party, the bank can dispute the charge. There’s no reason this should need to go to collections for resolution.

4

What happens to a persons mortgage if the mortgage company goes under.?

5

[QUOTE=Roland Orzabal]
Well, assuming you’re charged again, and assuming your bank’s customer service division continues to give you the runaround about dispute procedures and still refuses to escalate the issue, one of two things will happen. Either the charge on your account will fall beneath your bank’s write-off limit, in which case they’ll essentially just give up on billing you after three months of nonpayment, or else your account will be sent to Recovery/Collections. Once the latter happens, you are within your rights to request proof that the debt is owed before paying it. If the charge was never authorized, such proof will not exist.

That said, the above contains a lot of assumptions. I’m interested to know what sort of “protection plan” continues to bill a zero-balance, closed account. In all likelihood, I’d bet that what you saw was the final charge for service on the previous cycle, in which case you wouldn’t be charged again. I’d advise calling back to the customer service line until you get a satisfactory explanation of exactly what the charge is, why it was charged in the first place, and what you can do to stop it. If the bank is charging you, they can tell you why; if it’s a third party, the bank can dispute the charge. There’s no reason this should need to go to collections for resolution.
[/QUOTE]

Thanks. The charge is in fact for the “credit protection plan”, which again, I never authorized. Sigh…

I guess I’ll have to wait and see what happens.

I still don’t see how such a charge can be added to a CLOSED account. Trust me, I will elevate this if I see a charge for May. I will also be contacting my state attorney general. It’s not the amount of money, it’s the principle. I think the whole thing is shady. In fact, when they tried to sell me their “protection plan” over the phone, I emphatically told the caller NO; several times. The person on the phone became very combative, and I told him once more, “NO, do not add this to my account”, and ended up hanging up on him. I guess this was a huge mistake. :frowning:

6

Ooh! I’ve got a question that has bugged me for years. I’m sure it’s been answered on the Dope, but my search-fu sucks. I’m also sure that if I had the intelligence of an anencephalic chimp, I could figure it out myself. But here goes:

I don’t understand electronic money transfers. If I wire money from Beirut to the US (as I frequently do), HSBC in Beirut subtracts a certain amount from my account and BB&T in the US credits my account by a certain amount. But nothing actually changes hands–I mean, HSBC doesn’t follow up by shipping a bag of money to the US. So if this money only exists as an entry in some bank’s computer, what’s to keep them just from adding a few zeros, or wiring money they don’t have? So when some creditor asks the bank to pay up, the bank can just send the creditor an e-mail saying, “Sure, I debited my account by $X, so credit your account by $X.” Paper money as chits representing buying power I understand; ‘electronic’ money I don’t understand.

7

[QUOTE=Sophistry and Illusion]
Ooh! I’ve got a question that has bugged me for years. I’m sure it’s been answered on the Dope, but my search-fu sucks. I’m also sure that if I had the intelligence of an anencephalic chimp, I could figure it out myself. But here goes:

I don’t understand electronic money transfers. If I wire money from Beirut to the US (as I frequently do), HSBC in Beirut subtracts a certain amount from my account and BB&T in the US credits my account by a certain amount. But nothing actually changes hands–I mean, HSBC doesn’t follow up by shipping a bag of money to the US. So if this money only exists as an entry in some bank’s computer, what’s to keep them just from adding a few zeros, or wiring money they don’t have? So when some creditor asks the bank to pay up, the bank can just send the creditor an e-mail saying, “Sure, I debited my account by $X, so credit your account by $X.” Paper money as chits representing buying power I understand; ‘electronic’ money I don’t understand.
[/QUOTE]
Good question; wire transfers are more complicated than they might seem. When an international wire transfer occurs, the first thing that happens is that the bank sending the money transmits a request to the receiving bank, via a secure service such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), informing them that the transaction is about to occur. If you’ve ever done a wire transfer and were asked for your bank’s “swift code”, this is what that term refers to.

The secure message will also contain instructions on how to resolve the transaction. For the transfer to occur, either the banks must use a reciprocal account held between the two, or else any funds involved must be directly transferred to a bank where such an account exists (known as a “correspondent bank”). This allows each bank to ensure that the other’s general ledgers reflect the proper credit and debit, and prevents either party from altering the amount during or after the fact.

Once the ledger entries are resolved, the transfer occurs, and the funds are credited to the account at the receiving bank. As soon as that bank processes the credit during its batch update, the funds are available in the recipient’s account.

gonzomax, I promise I’m not ignoring your question; I just don’t have much practical experience with mortgage accounts and it’s been a few years since I took those classes. My best guess is that the debt would be divested to the highest bidder as part of the bankruptcy settlement, in which case you (the debtor) would have the same outstanding mortgage debt, it’d just be under a different bank’s name. I’ll check regulation tomorrow, though, and see what else I can find.

8

Do US banks close accounts for “inactivity”?

Back in '97, I discovered that I had one black mark in my credit check (one! and they made it sound like I was a bank robber!) because someone had opened an account for a gardening company using my SSN. After several months of no movements, the account was closed for inactivity. I have a theory on who exactly had opened the account but that’s neither here nor there; I went to that bank branch and got them to admit that yes, the signature in the paperwork looked not at all like mine. They claimed that it was a “duplicate SSN” because “SSNs are handed out by several agencies and sometimes this happens.” I whatever’ed it after they took the line off the credit record.

Closing accounts both times I’ve left the country was a total pain, since I had to go to the office where I’d opened them.

The last time I was in, my paypal account was left open; I recently had some activity on it by mistake after two years with zero balance. It currently has a balance of +0.01, yeehay and yeehow. I can’t close it because I don’t have the information they ask for; they say they can’t close it because “it has to be customer initiated” (le sigh).

I realize paypal is a different animal, but would you expect the paypal account to be closed if I stay away from it long enough? How long would your bank take until they close an account for inactivity?

9

[QUOTE=Roland Orzabal]
This allows each bank to ensure that the other’s general ledgers reflect the proper credit and debit, and prevents either party from altering the amount during or after the fact.
[/QUOTE]

So basically, the fact that a bank has $X is a matter of record-keeping–a matter of keeping track of who has entrusted money with the bank, and whom the bank has credited with what amount, etc.; the money has no physical reality except in the record books of the bank and the various constituencies involved with the bank. So if these records were to be destroyed, the money would disappear, as there would be no way of knowing how many ‘credits’ the bank had accumulated, right? If so, scary thought.

10

[QUOTE=Sophistry and Illusion]
So basically, the fact that a bank has $X is a matter of record-keeping–a matter of keeping track of who has entrusted money with the bank, and whom the bank has credited with what amount, etc.; the money has no physical reality except in the record books of the bank and the various constituencies involved with the bank. So if these records were to be destroyed, the money would disappear, as there would be no way of knowing how many ‘credits’ the bank had accumulated, right? If so, scary thought.
[/QUOTE]

Here’s something even scarier - the original programmers of the banks’ computer systems and infrastructures, woefully lacking in foresight, have only allowed 4 digits in the systems’ memories for storing the current year. Which means, come the year 10,000 C.E., the computers will think the year has gone from 9999 to 0000, and worldwide meltdown will ensue. Your accounts will be lost forever. There will be pandemonium in the streets: looting, pillaging, and other general mayhem. Perhaps the world as we know it will end on this day.

I can only hope that by that time we have successfully colonized Mars. I entrust that the governer of our great state of California is already working hard to this end, as he is the only major political player currently who has experience in this area. (cite)

11

[QUOTE=Rigamarole]
Here’s something even scarier - the original programmers of the banks’ computer systems and infrastructures, woefully lacking in foresight, have only allowed 4 digits in the systems’ memories for storing the current year. Which means, come the year 10,000 C.E., the computers will think the year has gone from 9999 to 0000, and worldwide meltdown will ensue. Your accounts will be lost forever. There will be pandemonium in the streets: looting, pillaging, and other general mayhem. Perhaps the world as we know it will end on this day.

I can only hope that by that time we have successfully colonized Mars. I entrust that the governer of our great state of California is already working hard to this end, as he is the only major political player currently who has experience in this area. (cite)
[/QUOTE]

That’s it! I’m stashing all my money in my mattress!

12

[QUOTE=Sophistry and Illusion]
So basically, the fact that a bank has $X is a matter of record-keeping–a matter of keeping track of who has entrusted money with the bank, and whom the bank has credited with what amount, etc.; the money has no physical reality except in the record books of the bank and the various constituencies involved with the bank. So if these records were to be destroyed, the money would disappear, as there would be no way of knowing how many ‘credits’ the bank had accumulated, right? If so, scary thought.
[/QUOTE]
In a sense, yes, this is true. However, this is exactly why banks are required to maintain mutual records of any interbank transactions, the Fed maintains records of processed items, and paper records of transactions conducted (statements, checks, sales drafts, etc.) are physically stored for at least seven years. In addition, banks currently maintain backups of backups of backups of past and current information. This is why, if your bank has 24/7 online banking or automated telephone services, those services are inoperable for about one night a month; this is when the backups are occurring.

In order to make it so that a bank could not reconstruct a record of how much money it had, one would need to destroy not only the computer and physical records, backups and photocopies held internally by the bank itself, but also those of any banks the target had transacted with, and those of the Federal Reserve. Individual entities within the banking system are heavily intertwined; an attempt to destroy a bank by erasing its records entirely – were such an attack plausible – would be akin to trying to destroy a concept by deleting its Wikipedia entry. The information is still extant; it would just need to be reconstructed from a variety of sources.

In other words, unless the entire worldwide economic system self-destructs, your money won’t be disappearing anytime soon. :slight_smile:

13

[QUOTE=Nava]
Do US banks close accounts for “inactivity”?

Back in '97, I discovered that I had one black mark in my credit check (one! and they made it sound like I was a bank robber!) because someone had opened an account for a gardening company using my SSN. After several months of no movements, the account was closed for inactivity. I have a theory on who exactly had opened the account but that’s neither here nor there; I went to that bank branch and got them to admit that yes, the signature in the paperwork looked not at all like mine. They claimed that it was a “duplicate SSN” because “SSNs are handed out by several agencies and sometimes this happens.” I whatever’ed it after they took the line off the credit record.

Closing accounts both times I’ve left the country was a total pain, since I had to go to the office where I’d opened them.

The last time I was in, my paypal account was left open; I recently had some activity on it by mistake after two years with zero balance. It currently has a balance of +0.01, yeehay and yeehow. I can’t close it because I don’t have the information they ask for; they say they can’t close it because “it has to be customer initiated” (le sigh).

I realize paypal is a different animal, but would you expect the paypal account to be closed if I stay away from it long enough? How long would your bank take until they close an account for inactivity?
[/QUOTE]
Accounts can indeed be closed for inactivity, or “dormancy” as we refer to it. The length of the period of inactivity required to close a dormant account is prescribed by law and varies from state to state, but commonly ranges from three to five years. Well before the account is closed, you will receive written notice of dormancy status, in addition to an acknowledgement form that can be signed and returned to prevent the account from being assessed penalties (or closed).

If this form is not returned and the account remains inactive, your account will begin to be charged a monthly dormancy fee until the prescribed time period passes. At that point, the account will be closed and the funds will be escheated to the state in which the account is held.

Any debit transaction within that time period will remove the dormancy status and “reset” your account. If you have an account you worry may become dormant, simply make a small withdrawal or send $0.01 to some lucky recipient via PayPal or a similar service, and you’ll be all set.

As to PayPal, per their User Agreement:

So, a dormant PayPal account will be closed and the funds escheated after three years of inactivity.

14

IANARO, but. . .

[QUOTE=gonzomax]
What happens to a persons mortgage if the mortgage company goes under.?
[/QUOTE]

You get the house for free!!!

Actually, I was just reading something about this. . .it’s going on with several companies, most notably "New Century Financial.

What seems to be happening with NCF is that they got loans from big banks to write mortgages. They can’t make payment on those loans because people can’t make payments to them, and then as the enter bankruptcy, they start selling the loans off. . .presumably for pennies on the dollar.

Some of their loans are going to be sold at auction. So, Trunk Co. might see all these shitty loans sitting out there, but if I can buy them cheap enough, it still worth it even if people keep defaulting. Trunk Co. “gets” to foreclose and gets payments from the people who are still paying their loans.

The price of “risk”, however, is going to start going through the ceiling.

But, you the borrower are still just as on the hook for the loan as you were before.

A story from today about this happening. . .

link.

15

I used to be a commercial bank manager myself way back in the middle ages. Back then, if someone came into the branch and cashed a check (yes, this was before ATMs), we put a hold on the customer’s account for the amount of the check. When the check posted that night with all the day’s work, the hold expired and the customer’s account was lowered by the amount of the check.

Is this still how it works, or do you actually debit the customer’s account at the time the check is presented to the teller (i.e. before the check goes to proof)?

16

[QUOTE=Dr. Woo]
I used to be a commercial bank manager myself way back in the middle ages. Back then, if someone came into the branch and cashed a check (yes, this was before ATMs), we put a hold on the customer’s account for the amount of the check. When the check posted that night with all the day’s work, the hold expired and the customer’s account was lowered by the amount of the check.

Is this still how it works, or do you actually debit the customer’s account at the time the check is presented to the teller (i.e. before the check goes to proof)?
[/QUOTE]
It still works the same way. If an on-us check is cashed at a branch, a hold (or “audio debit”, which is the same thing, although certain banks insist it isn’t) will be placed for that amount until the check actually posts. The only transactions that hard-post immediately are POS debits – ATM withdrawals and PIN-based debit card purchases. Even then, if the transaction takes place after the daily cutoff time, the posting reflects a date of the next business day, so for all intents and purposes it’s just a hold.

17

[QUOTE=Roland Orzabal]
The only transactions that hard-post immediately are POS debits – ATM withdrawals and PIN-based debit card purchases. Even then, if the transaction takes place after the daily cutoff time, the posting reflects a date of the next business day, so for all intents and purposes it’s just a hold.
[/QUOTE]

Interesting - thanks!

18

[QUOTE=Trunk]
What seems to be happening with NCF is that they got loans from big banks to write mortgages. They can’t make payment on those loans because people can’t make payments to them, and then as the enter bankruptcy, they start selling the loans off. . .presumably for pennies on the dollar.
[/QUOTE]
Unless the housing market declines 95%, I doubt you’ll be seeing any mortgage loans go for pennies on the dollar. Worst case, the bank gets the house, which is still likely to be worth at least half of what was paid for it.

19

It’s been a couple of decades since I’ve bounced a check, but I always wondered about the NSF fees. How much of the fee is really related to the cost of the bounced check, and how much is related to the “we’ve got 'em by the short and curlies NOW” mindset?

Not that I’m bitter or anything.

20

[QUOTE=Roland Orzabal]
As to PayPal, per their User Agreement:

So, a dormant PayPal account will be closed and the funds escheated after three years of inactivity.
[/QUOTE]

OK, so now I need to avoid so much as touching the Paypal screen for three years… thanks!