Main Street Bank, Texas – I’m Calling You Out

December 30th, 2010

Sometimes, enough is enough. We’ve tried talking to you, but you don’t want to listen. We tried talking to your supervisor (the FDIC), but they don’t seem to care. So we are left with very few options.

On late December 24th, you sent a notice that you were canceling some of your certificates of deposit. You claim the FDIC ordered you to do so, but we have yet to see actual proof of this. You hang your hat on a clause in your disclosures that reads, “We may also close this account at any time upon reasonable notice to you and tender of the account balance personally or by mail.” First problem, sending a notice on the same day that you send a wire isn’t reasonable. Second problem, a CD is not a typical deposit account. A CD is a time deposit with a contractual term and rate. You may have the right to close the account, but you are obligated to pay the interest through the maturity date. That is the agreement you made with each of these CD account holders. Anything less, is a travesty, unimaginable act of bad will, and most of all, you are breaking your word.

So Main Street Bank located in Kingwood, TX, I’m calling you out. I’m giving notice to you and any future customers of yours, that your word is worth less than the paper it is printed on. Anyone that considers opening a future CD or any other account with you will hopefully shop with a different bank or even better yet look to a credit union. No wonder people don’t trust banks.

You see, the depositor had other options at the time that they opened their Certifcate of Deposit. You have robbed them of the interest that you promised them for the original term of the CD. If you had any honor, you would immediately wire the remaining interest that you owe. And not only did they trust you, but so did we. Shame on you. And shame on the FDIC for not doing their duty (and believe me this isn’t the first time) to protect depositors from unscrupulous banks that hide behind small print.

No reasonable depositor expects that a bank can just up and close their CD without paying all interest. Historically, the only exception to this has been when the FDIC closes the bank.

Main Street Bank of Kingwood, Texas, I will gladly retract this post, just pay the depositors what is due to them. Just be honorable.

Update: A comment below asked to see the letter that was sent out. Here is the letter with the appropriately redacted information. View letter And to be clear, it wasn’t just one CD. It was 14 CDs that totaled about $1.4MM. Lost interest is about $32K. So a fairly decent chunk of change. Also, although the letter references a consent order from the FDIC, the only thing the consent order mandated was that they shrink in size. The bank came up with the plan to do it. And the bank unfairly closed a set of CDs with out properly compensating the CD holders.
cd :O)

-- By +Chris Duncan

10 Responses to “Main Street Bank, Texas – I’m Calling You Out”

  1. Shannon Says:

    This is just pathetic! It really seems like the FDIC should have a basic standard for CDs which of course would require banks to honor the rate & term through maturity so long as the bank isn’t closed.

    I don’t know who in their right mind would ever want to place a deposit with this bank ever again!

  2. fred Says:

    If anyone is angry (and as petty as this bank is) you could find a payphone, and simply call their 800 number (1-877-847-6246) numerous times, hanging up as soon as they answer. If you do so from a home phone, it only costs them about a penny (and your number will be shown on their system even if your number is blocked), but if you do it from a payphone, FCC rules require the payphone owner to charge the toll-free number’s owner (in this case, Main Street bank) at LEAST 24c per call. So everytime you call United Airlines or Citibank or whoever, if that 800/888/877/866 call is from a payphone, they have to pay a 24c fee on top of the couple pennies it costs them for the call. Hanging up immediately after they answer with their voice mail “Hello, thank you for calling…” makes them have to pay for it. From a payphone (if you can find one, they’re getting harder to find), dialing fast, immediately hanging up and calling back, you could easily cost them $15 in phone charges for 15 minutes of doing that from a payphone. I’m not telling anyone to do it, of course. Just pointing out how toll-free numbers work.

  3. Main Street Bank Says:

    The 800# has some appeal, although don’t want to stoop to their level. Calling and leaving a real complaint would have a similar affect. They would have to pay the charges for every call and the time. Faxing and emailing complaints would also cost them in time.

    Just hoping they will see the error of their ways.

    Note: This comment is not from Main Street Bank. The goal in the link is to get this post associated to the bank name in the search engines. Sorry for any confusion.

  4. OC Steve Says:

    A side note on early CD closing without the depositor’s approval.

    A few years ago a small S&L in Florida, G&L Bank, decided to wind-up operations and do a voluntary liquidation. Instead of selling the deposits to another Bank, they went ahead and calculated the remaining interest contractually owed on the CD’s and issued a check for the full P&I to maturity and closed the accounts. This allowed the customers to reinvest the funds and get “double interest” for a time.

    Although the S&L closed the accounts, it did the right thing and fulfilled their legal obligation to all depositors.

  5. Jim Says:

    Not to cast doubt on your story, but it would be helpful if you could post a scan of the letter with your personal info redacted. Or conversely, you could post the exact wording from the body of the letter that details their reasons for the cancellation.

    IMO, if there isn’t more to this beyond the bank’s reliance on obscure small print, this is a huge deal and will be a national main-stream press story soon.

  6. John Says:

    As a retired lawyer, I am not taking cases anymore. However, I can tell you that anyone who takes this to small claims court for return of the interest lost to the end of the contractual term would probably win. Interpreting a modification clause so broadly that it would allow them to unilaterally terminate the CD while holding the account holder to a severe penalty for early withdrawal would be against public policy. Such clauses are normally interpreted to apply only to NONMATERIAL aspects of the contract, not something fundamental like the interest rate or term of the CD. Most states also have provisions for triple damages and attorney’s fee awards for cases, like this, involving unfair business practices. Anyone who is a victim of this bank should consult an attorney about his or her legal rights.

  7. CD Rates Blog Says:

    @OCSteve – That is the correct way to close CDs early and a few banks did just that at the end of the year.

    @Jim – I will be happy to post the letter and the disclosure. I will do that later today.

    @John – It would be nice for someone to pickup the case. The most troubling aspect of lawsuits is the time it can take for resolution.

    I added a link to the letter. Jump to letter

  8. Patricia Says:

    I seriously can’t believe that they just sent you a warning the same day they cancelled your investment. I personally have an account at my local credit union and believe that is the best option as far as banks are concerned.

  9. Kristin Says:

    This is just awful! Same thing happened to my dad back when we were still living in San Francisco. It just pissed us off that no lawyer seemed interested to take our case. If it were up to me, I’d skip banks and, like Patricia, open an account at a local credit cooperative.

  10. Jessica Says:

    This is horrible I just cant believe it! Credit Unions are sometimes the best options specially when they are localized. I do wonder about the big guys sometimes. Hope everything turns out better. This should not be happening.

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