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Banks rack up $100B in legal costs

By Claes Bell · Bankrate.com
Friday, September 6, 2013
Posted: 7 pm ET

If you're wondering why banks have been jacking up fees on customers so much since the financial crisis, it might be because they need some cash to pay their lawyers.

The six biggest U.S. banks have racked up $103 billion in legal costs since the financial crisis, according to a Bloomberg analysis of Federal Deposit Insurance Corp. data.

From bank fees paid to lawyers to massive settlements like the $9.3 billion in cash and mortgage concessions to put to rest the so-called robosigning scandal, banks have been up to their elbows in legal costs that are largely a result of their own bad behavior.

For example, The New York Times reported just this week that JPMorgan Chase & Co. is facing a fine of $80 million over accusations it misled customers to sell identity theft protection. The bank may face even more fines over its overdue bill collection practices.

Ultimately, as with any "cost-of-doing-business," banks will try to recover those legal costs by generating revenue from customers. And since they probably won't be able to do it by charging higher rates for loans or paying less in interest on deposits in this low-rate environment, at least some of it will probably come from higher fees.

What do you think? Do bank customers foot the bill for banks' bad behavior, or does it come out of shareholders' pockets?

Follow me on Twitter: @ClaesBell

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