U.S. Starts Trust Account Probe at 100 Large Banks

The Comptroller of the Currency has launched an investigation into how 100 large banks with trust accounts totaling more than $1 billion each are investing the money in the accounts, officials said Wednesday.

Lee Cross, spokeswoman for the comptroller’s office, said the investigation began after routine bank examinations found that some big banks were not giving trust customers the maximum rate of return.

She said the comptroller’s office two weeks ago sent out requests to 100 banks with the largest trust accounts asking them for details on how they are investing funds in the accounts.

Not ‘Maximum Use’

“We discovered that a few banks were not making maximum use of idle cash in trust accounts, and we wanted to see how extensive this problem is in the banking system,” Cross said.

A trust account is set up by individuals who want banks to control the investment of a part of their assets. Under federal regulations, a bank must handle the funds so that they receive a maximum return.

Cross said routine examinations had turned up some banks that had either not invested idle cash at all or had the trust-account money in low-yield accounts rather than the higher-paying money-market accounts.

Officials at the comptroller’s office said the banks where this has been discovered had reimbursed trust customers the difference between what their accounts actually earned and what they could have earned if the banks had properly invested the funds.

In January of this year, Bank of America was absolved of accusations that it had used trust funds “for (its) benefit and profit” rather than for the good of the beneficiaries.