Does a bank have fiduciary responsibilities to borrowers? A fiduciary duty is the highest standard of care. Creative legal teams have tried to argue that banks have some responsibility to advise, appraise, or evaluate the prudence of investments for customers. (see Wells Fargo Bank N.A. v Vandorn http://www.starrausten.com/do-bankers-have-a-fiduciary-duty-to-their-customers).
Does a Bank Have Any Responsibility for Making Loans Ending in Default?
Banks are responsible to their depositors and shareholders so they need to practice due-diligence when making loans. But are they also responsible to make sure the borrower is making a good decision too? Bank and borrower typically go into a loan transaction with high hopes and best intentions.
The economy is good now, but business doesn’t stay great forever. In a year or three, there will be a downturn, and a trail of bad bank loans for developers and others who invested in real estate and other things. Banks then sue the investors to collect on the defaulted loans. What courts have consistently ruled is that in ordinary lender- borrower relationships, the lender does not owe any such duty to the borrower.
Again, as mentioned above, creative legal teams have tried to argue banks’ bear responsibility for advising borrowers in their investments and just because courts have consistently ruled in favor of the banks, it doesn’t mean there won’t be more attempts in the future.
In these types of cases, attorneys will seek expert witnesses to help them make their case.
In Philadelphia, the greater area of Southeastern Pennsylvania, Central and South Jersey, and Northern Delaware, Lee Tabas of TABASFUNDING is often called upon as expert witness in court cases in such matters.
Currently a private lender for growing companies in the region and former president of Royal Bank of Pennsylvania, Lee Tabas is skilled experienced in business, lending and banking.