I bank at one of the major money center banks.  This is not by choice but due to my own lethargy as when my bank was acquired I stayed put rather than move my safe deposit box and reprint my checks.  Last month I deposited a check from a new client.  It was not a huge sum of money but as we had not done business together before, I waited the customary two business days to make certain that it had cleared and checked my on-line statement before assuming that the funds were in my account and then forgot about it.  Imagine my surprise two weeks later to receive a letter from my bank informing me that they were enclosing the returned check (actually a facsimile copy), had reversed the deposit and charged me a service fee.

I went to the nearest branch of this bank to see what had occurred and found that the check had been miscoded, an error my bank had also made six months previously when bouncing another of my deposits from a different client.  The assistant branch manager agreed to redeposit this check and asked the teller to place the facsimile check in a special sleeve so that it would be hand-coded and the error would be corrected and she most graciously agreed to waive the fee for the returned check.


Lo and behold, two days later I checked on-line and found that the re-deposit had also been reversed and another service fee had been charged to my account so this time I called my client and requested that they replace the check with a wire transfer which they were happy to do.  Of course, my bank account was then charged a wire transfer fee.  It turns out that once a check has been miscoded by my bank it cannot be undone; apparently there is a law of “bank infallibility” (I mistakenly thought that power was reserved for the Pope) which comes into effect and states that since the bank can never make a mistake, there is no need for them to create a procedure to correct a problem that cannot occur. 

This bank will not suffer for their failure to change as they far too large for the government to allow them to fail.  And there is no need for them to take any rapid action as they are immune to market conditions.  When other banks fall into difficulty, they will be merged into this goliath and “my” bank will continue to grow and prosper.   

But there is a world of difference between this bank and any homebuilding company.  No homebuilding business, no matter how large, is going to be saved by the federal government. And if they fall into serious trouble they will probably not be saved by anyone else.  If you doubt that, take a look at John Laing Homes which was sold to Dubai-based Emaar Properties in 2006 for $1.05 billion, filed for bankruptcy in February, 2009, then liquidated their assets.  And that is just one of the 84 “major” and 53 smaller homebuilding companies reported to have “imploded” in the past four years (http://builder-implode.com/).

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