business news in context, analysis with attitude

Reuters reports that "a proposed $19 million settlement between MasterCard Inc and Target Corp over the retailer's 2013 data breach fell through after not enough banks accepted the deal ... The agreement, announced in April, would have provided up to $19 million to banks and credit unions that sued Target in federal court in Minnesota over the breach."

The story notes that "the settlement was contingent on banks that issued at least 90 percent of the MasterCard accounts signing on to the agreement by May 20. Any bank that accepted the settlement was required to drop further claims against Target." That threshold was not met, MasterCard announced late last week.

The Reuters story notes that "lawyers for the banks have estimated the total losses at more than $160 million, with approximately half that amount lost to fraud and half to the cost of reissuing nearly 9 million credit cards." A number of banks had tried to block the deal in the courts, arguing that it was designed to undercut their claims; while the judge in the case had rejected the suit, it appears that by simply refusing to sign on to the agreement, they have achieved much the same result.
KC's View:
I almost never feel bad for the banks, but I do think that trying to get them to accept $19 million as compensation for a problem that cost them $160 million seems a little unreasonable.

(I found it enormously satisfying last week when five banks pleaded guilty to criminal charges that they manipulated foreign exchange markets for their own benefit, and agreed to pay more than $5.5 billion in collective penalties. I have no idea what it means to "manipulate foreign exchange markets," of course, but it sounds bad ... and it is about time that these institutions be held accountable for their practices.)