Banks refusing to issue $208m in insurance checks for Hurricane Sandy victims

Wells Fargo, Bank of America, Citibank and JP Morgan Chase are reportedly sitting on $130 million in insurance checks for thousands of victims of Hurricane Sandy, and are simply refusing to issue them, and no one knows exactly why.  (A total of $208 million in insurance checks are still outstanding.)

At this point it’s really difficult to say what the banks have to do to get into enough trouble that someone finally holds them accountable for their actions.

The recent Libor fines are a start, but between the banks fleecing unemployed Americansgaming the tax system (after being saved by those very taxes), and singlehandedly creating the economic crisis, it’s hard to argue with Matt Taibbi when he says the banks aren’t just too big to fail, they’re “too crooked to fail.”

As if all of the above weren’t bad enough, now the banks are holding on to $208 million that is supposed to help people rebuild after the devastation of Hurricane Sandy.

Few expect the bankers to have any morals, but one would expect to hear a lot more from the political class about this. How can people rebuild their lives after a disaster like Sandy if the banks are refusing to give up money people need, and are owed?

The most troubling aspect of this is that the banks in question all received TARP funds to keep them alive.  Surprise!

The banking industry is the most entitled group in the country, and they’re responsible to no one. Yet they never seem to understand why they’re hated so much, by so many.

How long will this be allowed to continue?

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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15 Responses to “Banks refusing to issue $208m in insurance checks for Hurricane Sandy victims”

  1. Joe says:

    Waaa. Waaaa. Waaa. Geez. Want a little cheese with that whine? Banks are accountable to bank regulators. Call one of them and complain.

  2. NSNY says:

    This is my first visit to this site and I’m sorry, but I have to agree with this person’s summarization (sans the negativity). Please report information in a useful way, otherwise this is useless. Much appreciated.

  3. NSNY says:

    Can you explain how the money is processed, why it’s in the bank’s hands, and what’s happened that shows people aren’t getting their money? Some factual information here would be nice so that we can do something about it. Thank you!

  4. Austin says:

    Burned at the stake, public stoning, public hanging, firing squads, I think there are a number of ways to correct the banking industry.

  5. yeah, banks are in a conundrum…, if they payout a mortgage, they lose the huge profit from continuous monthly interest payments. Someone from harvard business school is madly trying to develop risk assessment models. New investment won’t be in the housing sector for sure.

  6. i would take this way more seriously if you (the web gurus) would remove the advertising banner that thought B0fA ads would be a good match for your demographic.

  7. LanceThruster says:

    I suppose they longer they sit on it, the longer they can profit from sitting on it.

  8. SkippyFlipjack says:

    Why should facts get in the way of Americablog’s stellar reporting? Reading down to the end of the linked article, and thirty seconds of Google research, shows that, like you describe, the banks want to exercise oversight over the payout to mortgage holder and homeowner. Those same 30 seconds of Google research reveal that the banks have processed around $1.3 billion in Sandy damage money, a relevant piece of information. The banks are saying they’re doing what they can; New York Governor Andrew Cuomo, for one, is saying they need to go faster, and he’s initiated an investigation. (Here’s more information about the investigation: The truth is complicated, so Drive-by Chris cues up an anti-bank rant rather than helping readers understand what’s going on. Great work.

  9. perljammer says:

    “no one knows exactly why”?

    When I first saw the headline, I thought, “How are banks able to hold up payouts to homeowners from insurance companies?” Then I thought back to 1994, when I and many of my friends and neighbors suffered major property damage from the Northridge, CA earthquake.

    When your home is mortgaged, and your home is damaged in a natural disaster, large insurance payouts generally have to be monitored, approved, and the repair work inspected, by the mortgage holder (7Out7 makes reference to this process further downthread). This is because without this process, some homeowners will pocket the insurance proceeds and walk away, leaving the mortgage holder holding the bag. When there are a lot of claims, as in Sandy’s aftermath, the whole bureaucratic system gets bogged down and the “processing delays” start growing.

    So yeah, it’s very bad that payouts to homeowners are delayed. It makes sense to think there are a lot of cases where banks may use the number of claims as an excuse to make a profit on the float, and those cases should be investigated and prosecuted vigorously. But the reasons for the delays really aren’t all that mysterious.

  10. hauksdottir says:

    Every day that a bank holds your money is a day that THEY make interest from loaning your money somewhere else. Nowadays, it is more than interest: it is all the derivative financial transactions possible as long as they nominally hold your money. As soon as the bank sends you the check, the game is over.


    It isn’t that they can’t find someone else’s money to play with; they want everybody’s money. The more transactions, the more exciting the game.

  11. Clevelandchick says:

    So where is that newly formed Consumer agency Obama formed on this? Shouldn’t they be doing something here?

  12. ComradeRutherford says:

    “no one knows exactly why”

    Because they don’t have to. Who is going to make them? Nobody, because Regulations are bad. The hurricane relief funds are another transfer of wealth from the taxpayer to CEOs and no one dares to anything about it. And if anyone even tries, the TeaBirchers will stop it dead. The last thing TeaBirchers and Republicans want is for The People to get their hands on any money.

  13. BeccaM says:

    Money they keep is money they get to play with in the giant slot machine known as the derivatives market which, as is now the case, they’re free to game on as much as they like because the regulations barring such activities were repealed in the 1990s.

    Why are the banks sitting on these checks owed to Hurricane/Superstorm Sandy victims? Because they can. And because we have no laws or regulations saying they can’t.

  14. karmanot says:

    Nationalize and separate the Banks!

  15. 7Out7 says:

    Not much has changed since Katrina here in New Orleans in 2005. Our house was totally destroyed. I had a few thousand dollars left on my mortgage with Citibank. I also had flood insurance. The flood insurance check (from the government) came through pretty quickly but it was a two-party one. That means it had to go to the bank holding the mortgage. The bank had to deduct whatever was left on my mortgage and send me the rest. It took the bank four months to send me my money. I spent lots of hours getting the runaround from the bank as to why the funds were delayed.

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