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Bank Discontinuance In The Southeast

A Pressing Problem!

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7/29/05 -- Months of June and July Were Quiet (very quiet, actually), but why?  We received only one report of a closing in June and July.  Maybe, just maybe, this mess is going away.  Click on the FinCEN advisory below and perhaps you will see why! Clearly, action on behalf of congress has improved this problem.  The pressure on congress by everyone in the industry did make a difference.  Certainly, the letters got attention, especially when the letter was a constituent letter. 

One of our members in Alabama wrote to his congressman (Congressman Aderholt) as we requested.  He not only received a written reply from the congressman, but a phone call from Aderholt's assistant and the advisory below followed the phone call.  The assistant indicated they were fully aware of the problem and wanted to be informed of any bank that caused a problem.  Wow, we only need a few more folks like that in Washington!

April 26 FinCEN Advisory (consider showing your banker this if you have a problem).  This is an Adobe pdf file (six pages).  It may take a few moments to load on your computer.

6/4/05 -- Month of May Was Quiet and Modern Financial Holds Meeting. May has been quiet for bank closings.  There were a few reports of community bank closings around the first of the month, but nothing since.  The Modern Financial Association (the payday lending association for Alabama) held there annual meeting on May 18th.  It was an excellent meeting and time was devoted to discussing bank discontinuance.  Here is more information on the meeting and contact information if you wish to join the association (this is a .pdf file and may take a moment to load). 

5/4/05 -- Bad Things.  Since we published the last update a few days ago we have received several items of correspondence about events at the federal level.  None of them are good.  By the way, the links below are in Adobe file format so it may take a little longer for them to load on your computer.

First there is a letter from Senator Shelby in response to a letter from his constituent in Alabama.  The constituent sent a letter very similar to the one found on this site asking for help on bank discontinuance problems.  Here is Senator Shelby's reply.  Remember, Senator Shelby chairs the committee that oversees these problems.  Also, here is Senator Shelby's statement in opening the hearings on MSB problems just last week.

Next, are a series of emails regarding a bank closing in New York.  This closing happened very quickly after a federal audit.  New York has the same problems we have.  One of the largest banks in the state (Chase) made a wholesale dump of operators there a few months ago leaving many scrambling as we are here.  What is so bad about the New York closing is this bank had many MSB accounts (like AmSouth) and second, New York has a statute that you must have a New York bank account or you can not operate.  Of particular interest are the comments toward the end of the document of Senator Coleman who believes the enforcements on MSB's are not strong enough!

The bottom line of these articles is that things are not improving, as first we thought.  And, just maybe there are those in high places who just want to see us go away.

4/30/05 -- Reports Of Closings Continue.  Hurry Up Relief!  We have received numerous reports on closings this month.  Where is that relief when you need it (see below)?  Most all of the reports are closings from community banks.  Also, some of the larger banks continue to reject our business and give our members conflicting stories.  In one instance Regions Bank told an operator they would take them as long as they had an MSB number.  This operator did not cash checks (payday and title loans only).  Then, a few weeks later after the operator had complied and received an MSB, they told the same operator they would take them only if they DID NOT HAVE an MSB number.  In another instance, UP Bank (recently merged with Regions) told an operator they would take their business if they took out the Western Union machine and did not wire money.  Go figure! 

4/10/05 -- Relief Is On The Way!  Oh boy!  Here is the first sign we may be getting relief.  By the way, if you are having trouble with your bank, print this and pass it along.  And make sure the bank compliance officer gets their hands on this.  This document indicates more is coming.  When we get it, so will you.

In the meantime, please send your letter to your congressperson.  This is not over just yet.

4/6/05 -- Situation May Be Improving (but it has not gone away.....yet).  The coalition of associations held a conference call today.  We were advised by Ricky Myers (Mississippi Check Cashiers and FISCA Board Member) that there is some movement by the federal regulators to issue guidelines that should cause the banks to lighten up on our industry.  This is not to say the problem is solved.  It is to say that the letters to congressional representatives are having the desired effect.  A representative of Banco Popular, a national bank with a division that specializes in banking services to our industry, also participated in the call.  They attended federal hearings in March in Washington and reported the same results as Ricky.  They further indicated they are considering opening an office in Alabama to help those who are unable to locate a bank.  If you are interested in talking with them drop us an e-mail or call the Title Pawn Council of Alabama (205-733-9926).  We will get you in contact with representatives of the bank.  Banco Popular provides a wide array of banking services including lending and deposit services to our industry to clients across the country..

By the way, if you recently moved to a new bank after being cancelled DO NOT think you are now "cancel proof."  We know of several operators who have had to move more than once due to cancellations.  We also know of a few who can not find a new bank.  We are also beginning to receive reports of community banks sending out inquires to their customers for information.  It seems the community banks are lagging behind the large regional banks in their efforts.  So, don't be too surprised if we begin to see them cancel accounts like the larger banks.  Make sure you respond to each and every inquiry from your banker in a timely and professional manner.  Otherwise...........................

If you have not written your letter to your congressional representative, please click here and follow the instructions for sending your letter today.  It is working, but we need more letters!

3/11/05 -- Florida Newspaper Reports On The ProblemHere is an article that appeared in a recent edition of the Orlando Sentinel.  It does a good job of summarizing the problems.  Who would have thought you would get this from the mainstream press?  It almost sounds sympathetic.

2/28/05 -- Possible Relief From Feds!  We have a  possible break in the pressure to close our accounts.  Ricky Myers reports that federal regulators may soon meet with the industry to hear our complaints.  They have steadfastly refused in the past.  He feels this is a direct result of recent letters sent to congressional representatives from our industry.

We need your help immediately in getting more letters to congress. We have developed a sample letter that each of us should send ASAP.  Click here for instructions on completing your letter.

While all this is good news, it will most likely NOT have an immediate impact.  We must continue to deal with the day to day closing we have been reporting until this course of action generates results (see next item below).

2/28/05 -- Two More Closing Reports - (Disregard Good News Update Below on 2/19/05).  Just when we thought things were getting better!  

Closing #1 -- Ricky reports that Omni Bank, a Mississippi community bank, has sent cancellation letters to their customers.  In the notice letter they gave their customers about ten days to find another bank.  Ricky reports that we may see more community banks taking the same action as they finally get the message the big banks received a few months ago.  This is not good.  Many operators moved to community banks when their accounts were cancelled at the large banks.  By the way, this is not the first time we have received negative comments about community banks.  All in all, they still seem to be the best alternative.  We hope that is not changing.

Closing #2 -- We reported on 2/19/05 (below) that an Alabama operator who had two accounts at Compass Bank may have convinced the bank to allow them to keep the account.  Wrong!  Click here to see the certified letter they received on Friday, February 25th giving them thirty days to find another bank.  Interestingly, they were told that all "check cashers" who did $10,000 or more a day were targeted for closing by their bank.

2/19/05 -- No News -- Good News!  There have been no new reports of bank closings in the last month.  Very good!  We have received an update from an operator we reported on in December who received a cancellation notice from Compass Bank in Alabama (see comments below dated 12/13/04 & 12/20/04).  The operator said the bank is reconsidering and has asked for updated information and financials. This operator has two stores with Compass, each with separate accounts.  The bank, however, only sent a cancellation notice on one store.  The operator believes they cancelled that store due to incomplete information he included on the original request for information from the bank (the other store's original report was more complete).   

1/13/2005 -- Ricky Myers Reports On Meetings.  Ricky reported his FISCA board meeting turned out to be an extended discussion on bank discontinuance.  Many, many issues about the topic were discussed.  For the sake of brevity, we will relate only a couple of points here.  One, this is indeed a national problem.  It may be "slightly" worse in the southeast, but it is a problem throughout the country.  Two, it seems no one has a solid game plan for solving the problem for the industry.  Our group has some ideas and we will communicate those at a later date.

Here are few antidotes Ricky reported that you may find interesting.  First, there is a rumor that contrary to popular belief, AmSouth did not cancel all operators.  The unconfirmed report is that they continue to bank a large, multi-state operator based out of Tennessee.  We will attempt to confirm this in the next few days.   Next, it was reported that Chase Bank (New York) cancelled all check cashing and payday customers but Ace Cash Express (ACE).  Umm....  Wonder what gives?  And last, a bank in the northeast offered to bank all of the operators in the state when most of the other banks gave them the boot.  A federal regulator asked the bank president why he was banking "these types of businesses?"  The regulator went on to say what the payday people were doing was legal, but there was a real "ethical" question about their operations.  If true, that is a real problem! 

Ricky also reported on his meeting with BancorpSouth.  Again, for the sake of brevity the main point from the meeting was the fact that BancorpSouth will most likely follow suite with the recent Trustmark decision (next item down).

1/13/2005 -- Trustmark Bank Notifies Of New Policy and Service Fees.  Trustmark Bank has notified their check cashing and payday customers of new fee schedules.  We don't have all the particulars, but it goes something like this;  $100 per month per checking account and increased fees for withdrawing cash from the account (that is getting your own money from your own account).  They have indicated they will not open any new accounts and will closely monitor all existing accounts for possible closings.

1/7/2005 -- More Banks Evaluate Closings (some new ones).  We have learned that several banks, (some listed below and some new) are now taking a fresh new look at their relationship with us. Suffice it to say, they are not taking this new look with thoughts of expanding relationships!  If you are interested in the issues banks evaluate at these meetings click here to read a December article from the American Bankers Association magazine.  This article is quite revealing and it provides a good insight into what we are up against.  You should read it. 

Ricky Myers has two important meetings planned in the days ahead.  One is with a high level executive at a large Mississippi bank that is reconsidering their position on bank discontinuance.  The other is a FISCA board meeting.  The FISCA meet will have bank discontinuance as a top issue.  Make sure you check here early next week for more information on these unfolding events.  There is a high likelihood that some definite and immediate action may be considered to stop this threat against our businesses.

12/31/04 -- Update To 12/20/04 Operator Closing.  We reported this Alabama operator was first closed by AmSouth (scroll down to 12/20 below).  Next, they opened at Regions.  Regions kept them a few weeks and they then closed them.  This operator has NOT been able to locate another bank since the 12/20 closing.  Needless to say, they are quite concerned.  They are also quite confused.  They have stores around the country (no other stores in the southeast) and this is the only place they are having this problem.  Umm.......?    

12/31/04 -- Large Mississippi Bank Makes Decision NOT To Open New Accounts and To Evaluate Existing Accounts. Ricky Myers (MS Check Cashiers Association) reports that Trustmark Bank has made a decision not to open any new accounts and to closely evaluate  the relationship with existing accounts who are Money Service Businesses (which correctly or incorrectly includes all of us irregardless of check cashing operations).  Trustmark is an $8 billion, Jackson, MS based regional bank with operations in many southeastern states.  This information was passed to Ricky by a high-level bank executive with responsibility for compliance.  This is a setback from an earlier decision made by the bank in our favor and does not bode well for the future.  The compliance director further related to Ricky that all banks are under tremendous pressure to deal with this issue and they feel they (Trustmark) have no other choice but to establish these new guidelines.  Ricky offered to arrange a meeting with all of the compliance directors of MS banks to explain that, for the most part, we are NOT MSB's and to provide them an overview of our businesses.  The bank representative held the view that most banks would probably not be interested.  He further indicated that their direction was coming from the federal regulators and they just had no choice in the matter if they want to maintain their bank charter and avoid very steep fines.

Keep in mind that other banks are most likely going through the same exercise even as we have this discussion.

12/29/04 -- Mississippi Bank Refuses To Open New Account For Existing Customer.  This incident occurred when an existing customer of Trustmark Bank (MS) attempted to open a new account.  The operator has many stores and several existing accounts with the bank.  In addition, they have an excellent relationship with top level management of the bank.  The bank refused to open the account stating they would not open any new accounts for check cashiers, payday advance or title loan operators.

12/20/04 -- Another Alabama Bank Closing.  We received a report today regarding a new closing.  This time it was Regions Bank (now Union Planters).  The company was a payday advance and check cashing company.  Interestingly enough, this operator had been cancelled by AmSouth several weeks ago and had only recently opened their account at Regions.  This operator is relatively large and sophisticated.  They have been in business for many years.  We are surprised at this.

We also had a discussion with another operator who had been previously cancelled before the last report (below).  They were turned down by several of the regional banks and ended up with a local community bank.  It seems that local community banks may be the best bet for anyone who has been cancelled.  Especially someone like the company above who has been cancelled twice.

Update from the 12/13 closing (below).  Compass Bank has allowed the operator to resubmit their original questionnaire.  They also allowed them to keep the account open while they (Compass) take a new look.  That's good.  

12/13/04 -- Alabama Bank Closing.  A payday advance and title loan operator located in Alabama reported a closing notice from Compass Bank (AL based).  This is the first report of a Compass closing.  It does not seem to be a wholesale closing on the part of Compass.   The operator was sent an extensive set of forms to complete in September and considered them a nuisance.  He was also given a short notice to reply.  Consequently, he did not complete them with a great deal of thought.  We suspect this may be the cause of the cancellation.

So, if you get a request from your bank for information be aware of the importance of the request.  You may want to review the information here and "hand deliver" your reply to the branch manager based on these suggestions.  It is important that your reply to the bank be done properly!

12/10/04 -- First conference call to discuss the issue.  Representatives of the Mississippi, Tennessee and Alabama payday advance and title loan associations met to discuss the problem.  It was determined that the problem is primarily an AmSouth problem but there are most certainly other banks who have taken the same position as AmSouth.  Among these are Wachovia and Colonial Bank (Alabama)  So, our concern of this problem spreading to other banks is a valid concern.  Ricky Myers, with the MS Check Cashiers Association, has been highly successful in meeting with compliance directors in Mississippi banks and getting them to rethink their positions to close accounts.  

We agreed to keep everyone abreast of any changes and to focus on meeting with our congressional representatives in Washington in January to seek relief.. 

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