I work in this business. Lawsuits against big banks do happen all the time for stuff like this, you are right about that. But "They can settle for tens or hundreds of millions of dollars without batting an eye." is absolutely not true.

These big banks are very aware of their legal exposure and do a lot to minimize it. A bank (even a big one) would not authorize a legal reserve in the 10s of millions without lots of people very high up in management being involved. Big reserves like this are routine, but significant.