Banking Industry Suits

Did someone sneak into the vault of Bank of America's Century City branch, manage to get into the safe deposit boxes of at least three customers, steal hundreds of thousands of dollars in jewelry, cash and gold coins, and, in some cases, substitute fakes--all without the bank's knowledge? That is the substance of allegations contained in three separate lawsuits filed in Los Angeles County by former customers of the branch at 1901 Avenue of the Stars, which closed last year.

MBNA Corp. agreed to pay as much as $7.8 million to settle a class-action lawsuit accusing the world's No. 3 credit card issuer of luring consumers with misleading advertisements for low-rate cards. MBNA will pay up to $6.5 million--plus $1.28 million in lawyers fees--to reimburse customers deceived by ads touting how much they'd save by transferring their credit card balances to an MBNA account, consumer lawyers said in federal court in Wilmington on Monday.

Drexel Burnham Lambert, once one of Wall Street's most powerful investment banking firms, sued about 280 of its former top-paid executives Tuesday in an effort to recoup $260 million in bonuses. Drexel was driven out of business after it was engulfed by the Wall Street insider trading scandal involving its junk-bond wizard, Michael Milken. It is trying to reorganize as a smaller firm. Drexel is seeking the most money--$16.

The federally funded Los Angeles Community Development Bank has lost a battle in its fight to block a multimillion-dollar judgment awarded to a former borrower after a five-week trial. The recent ruling could be serious for the bank, which is now restructuring and must raise tens of millions of dollars in mostly private capital in order to continue operating in the long term. Superior Court Judge William J.

MBNA Corp. agreed to pay as much as $7.8 million to settle a class-action lawsuit accusing the world's No. 3 credit card issuer of luring consumers with misleading advertisements for low-rate cards. MBNA will pay up to $6.5 million--plus $1.28 million in lawyers fees--to reimburse customers deceived by ads touting how much they'd save by transferring their credit card balances to an MBNA account, consumer lawyers said in federal court in Wilmington on Monday.

A computer software programmer has filed a $60-million lawsuit against Security Pacific Corp., accusing the banking giant of copyright infringement, fraud and theft of trade secrets involving a computer program that he developed to help protect banks against losses from credit card fraud. Gerald Schwartz, a San Clemente programmer, claims in a suit filed Friday in U.S.

The showdown between commercial banks and nonprofit credit unions reached the Supreme Court on Monday, and the banks appeared to emerge with a slight edge after the hourlong argument. At issue is the banks' challenge to the rapid expansion of credit unions since 1982. That year, federal regulators changed the rules and allowed local nonprofit credit associations to expand their memberships nationwide.

Making good on their promise, California bankers filed suit Wednesday in federal court to overturn a ballot proposition approved overwhelmingly by San Francisco voters to outlaw the ATM surcharges that many banks charge non-customers. The passage of Proposition F on Tuesday made San Francisco the first city in the nation to curb--by citizen initiative--automated teller machine fees. Wednesday's lawsuit also targeted Santa Monica, where the City Council passed a similar law last month.

City Financial, a mortgage lender based in Orange, filed a trademark infringement suit against banking giant Citigroup Inc., alleging that Citigroup is confusing people with the name of its new CitiFinancial Credit Co. business. City Financial seeks to block Citigroup from using the CitiFinancial name, and City Financial projects it could suffer damages of as much as $125 million from what it calls unfair competition and false advertising.

A federal judge in Washington ruled that the U.S. broke a contract with California Federal Bank, opening the way for more trials on savings and loan claims totaling as much as $30 billion in damages. U.S. Claims Court Chief Judge Loren Smith accepted CalFed's argument that the government acted improperly by breaking an agreement to let the San Francisco-based thrift count part of the premiums from three acquisitions, called "supervisory goodwill," as capital.

Making good on their promise, California bankers filed suit Wednesday in federal court to overturn a ballot proposition approved overwhelmingly by San Francisco voters to outlaw the ATM surcharges that many banks charge non-customers. The passage of Proposition F on Tuesday made San Francisco the first city in the nation to curb--by citizen initiative--automated teller machine fees. Wednesday's lawsuit also targeted Santa Monica, where the City Council passed a similar law last month.

City Financial, a mortgage lender based in Orange, filed a trademark infringement suit against banking giant Citigroup Inc., alleging that Citigroup is confusing people with the name of its new CitiFinancial Credit Co. business. City Financial seeks to block Citigroup from using the CitiFinancial name, and City Financial projects it could suffer damages of as much as $125 million from what it calls unfair competition and false advertising.

Hoping to grow in an increasingly saturated market, credit card banks are offering some of the best deals ever: How about 0% interest for six months? A permanent rate as low as a mortgage? Cash back for every dollar charged? But even as the offers get sweeter, the credit card industry is under attack for failing to live up to its promises.

Golden State Bancorp Inc.'s California Federal Bank can't recover potential profit it lost as a result of a 1989 accounting rule change that sparked its $1.6-billion "supervisory goodwill" lawsuit against the U.S., a federal judge ruled. U.S. Claims Judge Robert H. Hodges' ruling doesn't destroy Cal Fed's case. Still, Hodges' one-page order undermines a key Cal Fed theory and throws a curve ball at litigants seeking as much as $30 billion in 120 cases.

Federal regulators slapped restrictions on Fidelity Federal Bank after credit card losses drained the thrift's financial cushion, Fidelity said Thursday. Fidelity Federal and its parent, Los Angeles-based Bank Plus Corp., said a $59.8-million third-quarter loss depleted Fidelity's risk-based capital, a key measure of financial strength, from 11.22% of total assets as of June 30 to 8.66% as of Sept. 30.

Golden State Bancorp Inc.'s California Federal Bank asked a judge for more than $1.6 billion in damages in its "supervisory goodwill" lawsuit against the U.S. government. The damages request, which asks for more than many analysts and investors expected, could give a boost to other litigants seeking as much as $30 billion in 120 separate cases. The aggressive bid could also pave the way for other lawsuits.

Golden State Bancorp Inc.'s California Federal Bank can't recover potential profit it lost as a result of a 1989 accounting rule change that sparked its $1.6-billion "supervisory goodwill" lawsuit against the U.S., a federal judge ruled. U.S. Claims Judge Robert H. Hodges' ruling doesn't destroy Cal Fed's case. Still, Hodges' one-page order undermines a key Cal Fed theory and throws a curve ball at litigants seeking as much as $30 billion in 120 cases.

A federal judge has thrown out a lawsuit that former banker Gerald J. Garner had filed against regulators, accusing them of illegally seizing his Anaheim bank more than three years ago. But Garner vows to continue his battle with the comptroller of the currency, which regulates national banks. He said Tuesday that he plans to appeal once the judge issues a final order.

Almost 200 people lost their jobs Friday as the $1.8-billion merger of Golden State Bancorp, the parent of Glendale Federal Bank, and First Nationwide Holdings, the San Francisco-based parent of California Federal Bank, was completed, forming the country's second-largest savings and loan.

A federal judge in Washington ruled that the U.S. broke a contract with California Federal Bank, opening the way for more trials on savings and loan claims totaling as much as $30 billion in damages. U.S. Claims Court Chief Judge Loren Smith accepted CalFed's argument that the government acted improperly by breaking an agreement to let the San Francisco-based thrift count part of the premiums from three acquisitions, called "supervisory goodwill," as capital.