Inside: - Media Communication Group

More documents

Recommendations

Info

COUNSELOR’S CORNERPART TWO:Additional Factors to Keep inMind in Order to MinimizeLender LiabilityRiskBY CHRISTIAN C.M. BEAMS, RYLEY CARLOCK & APPLEWHITEFirst, the public holds conflictingperceptions and expectations towardbanks. On the one hand, in the currenteconomic environment, many peoplehold lingering resentment and angertoward banks, blaming them (alongwith politicians) for the 2008 financialcrisis and resulting economic distress— many believe that banks got “bailedout” while ordinary citizens (andespecially those who lost their homesin foreclosures or short sales) sufferedundeserved harm. However, on theother hand, potential jurors holdunrealistic expectations for standardsof perfection for bankers, holding themaccountable for perfectly appraisingreal estate values and demanding perfecttiming in predicting market trendsin the midst of market turmoil. Bankersmay get the blame for any perceivedmistakes by real estate appraisers,even though the borrowers themselveswere mistaken in their perceptionsof their own properties. Innocentand immaterial errors in internalbank memoranda, including emails,may be viewed as blameworthy. Anynasty comments about borrowers inemails may be viewed by borrowersand jurors alike as nefarious, and asevidence that the bank was “out to get”the borrowers out of malice.IN THE SEPTEMBER/OCTOBER 2012 ISSUE OF ARIZONA BANKER, I PROVIDEDTHREE POLICIES BASED ON MY EXPERIENCE THAT, IF INSTITUTED IN YOURrespective institutions, should make therisk of being named in a lender liabilitylawsuit less. I discussed the importanceof not blending the distinction betweenoffering a product (loans) and providinga service (financial advice), the latter ofwhich comes with fiduciary duties, freeof charge. I also urged you to documentyour communications with your borrowersand to limit the staffing – and thuscustomer contact – on any particular file.In the intervening six months,my firm served as lead counsel in athree week lender liability jury trial.Shareholders Fred Bellamy and ScottJenkins, Jr., led that team, and whatthey observed in terms of court and jurormisperceptions during the processmay surprise you.Second, angry and frustrated borrowers— and potential jurors sittingin judgment of banks’ actions — maycling to dreamy scenarios of successwith respect to their real estateprojects, believing them somehow tobe exceptions to the market forces thatdoomed everyone else’s projects. Thefantasy that their project was specialenough to succeed while others aroundthem failed can be remarkably persistentin the face of what objectivelyshould seem daunting odds. Moreover,potential jurors may be more thanwilling to believe in the dreams of borrowerswith whom they identify andwho seem sympathetic, despite overwhelmingevidence to the contrary.Third, borrowers and potentialjurors are often unwilling or unable to10 www.azbankers.org
understand risk-based analysis. In the face of sympatheticborrowers’ professed certainty regarding the prospectsof success for their project, a bank’s inherently uncertainrisk-based evaluation may fall short of convincing them.The failed real estate developer always believes that, withjust a little more time, and a little more money, the projectwill succeed. The borrowers will claim that they reallywere motivated to look after the bank’s best interests, butthe bankers just didn’t understand their project needs, andpulled the plug on their project right before it was poised tobecome profitable.In a lender liability, it often seems like the borrowers liveon a different world from the bank and its experts, and theallure of attracting potential jurors to visit that alternativereality should not be underestimated. President’s Message — continued from page 4please call the Association and get on our manifest for ournext mission.We are also busy planning our convention for early June.(see page 16 for more details). After last year’s meeting in Sedona,we are back to the one-of-a-kind Ritz Carlton in Marana,Arizona this year. We will continue to bring top notch andcompelling presentations to convention participants, includingsome of the best industry analysts, economists, and — asalways — political prognosticators. Please plan on attendingwith your family. The water slide is one of the fastest inthe state, and the golf course, home to the Accenture MatchPlay Championship, is one of the most enjoyable and uniquein the country.For more informaon contact Chrisan C. M. Beams at (602) 440-4818;cbeams@rcalaw.com. Chris is a shareholder in the bankruptcy, lendingand commercial ligaon pracce groups at Ryley Carlock & Applewhite.The balance of the year will bring our members togetherwith public officials that either regulate our industry oroversee those who do. Additionally, we will continue to haveworkshops and provide best-in-class educational offeringsfor you and your directors that make navigating the difficulteconomic and political landscape in which we are doingbusiness a little easier. ARIZONA BANKER Spring 2013 11
Page 1 and 2: SPRING 2013You’re Invited!The AzB
Page 3 and 4: FINANCIALINSTITUTIONSOur financial
Page 5 and 6: A legal partner you can trust.Jeff
Page 7 and 8: Mark your calendar now!Arizona Bank
Page 9: uilt forchangeFinancial institution
Page 13 and 14: With changes in technology, regulat
Page 15 and 16: the door was always open for employ
Page 17 and 18: Ranch, Johnson Ranch, Verrado, Vist
Page 19 and 20: We can help unlock your potential.G
Page 21 and 22: Community banks should be prepared
Page 23 and 24: on the effectiveness of the control
Page 25 and 26: organization and mirror the commitm
Page 27 and 28: committeenotesThe Arizona Bankers A
Page 29: Get to know theBUSINESS SIDE OF COX
Page 32: 111 West Monroe, Suite 440Phoenix,

Inside: - Media Communication Group

Create successful ePaper yourself

Delete template?

Save as template?