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Oct 30
2008
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Lender Liability Morphs Into A New Worry For Bank LendersPosted by Ed O'Leary in Talking Credit   |
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In its original form, "lender liability" meant that a bank could be held liable for certain actions that were imposed upon a borrower by a lender in the course of a lending relationship. If such actions imposed by the lender resulted in harm or financial loss to the borrower, the bank could be held liable. The principal casualty of a key lender liability lawsuit of the 1960s was the sharing of practical business advice by the banker to the borrower. This was based on bank legal counsel's concerns that the bank could be liable for inappropriate or ill founded advice.
* How significant does this newer form of lender liability appear to be to your bank?
* What measures have you been taking to prevent such trouble?
* What are you hearing about this in your market, outside of your own institution?
Veteran
lender and workout expert O'Leary spent more than 40 years in bank
commercial credit and related functions, working with both major banks
as well as community banking institutions. He earned his workout spurs
in the dark days of the 1980s and early 1990s in both oil patch and
commercial real estate lending.
O'Leary began his banking career at The Bank of New York in 1964,
and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He
served as a faculty member and thesis advisor at ABA's Stonier Graduate
School of Banking for more than two decades, and served as long as a
faculty member for ABA's undergraduate and graduate commercial lending
schools.
Today he works as a consultant and expert witness, and serves as
instructor for ABA e-learning courses and a frequent speaker in ABA's
Bank Director Telephone Briefing series. You can hear interviews with Ed about workouts here . You can e-mail him at etoleary@att.net. O'Leary's website can be found at www.etoleary.com.
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