The short answer to your questions are: Yes, it does seem the bank is talking about a conservatorship. And yes, it would be perfect if the power of attorney and
As you may have experienced with your mother, mental states are often not stagnant. Someone can go in and out of what we might call “legal capacity” or “competency.” A power of attorney that takes effect in the event of someone’s incapacity, called a “springing” power of attorney, usually provides that the power lasts only as long as the person is incapacitated. In addition, powers of attorney do not necessarily mean that the agent—here, your brother—has exclusive power to act; the principal—here, your mother—may retain his or her rights to act on his or her own behalf.
The bank obviously does not want to be in the business of tracking each power of attorney presented to it, or of evaluating your mother’s mental state — nor do we generally want banks to have that discretion.
There may be a few practical options available to you before going to court and getting your mother placed under conservatorship. You may be able to have your mother’s doctor’s prepare a new certification of her inability to handle her affairs that makes a statement about her lack of capacity being permanent or degenerative. If the doctor prepares this certification, the bank may voluntarily refuse to respond to your mother’s changing demands.
In addition, you may want to re-evaluate your mother’s living situation; more oversight of your mother’s activities and phone calls might prevent these activities with the bank and might also prevent her from further harming herself, financially or otherwise.
All this said, while a conservatorship is burdensome and generally undesirable, it does afford protections to everyone involved—to your mother, to her agents and conservators, and to the institutions that hold her money and other assets.
doctor’s letter would suffice. However, there are many factors at play in your mother’s situation and, unfortunately, what you wish the bank would do, or what the bank could do, are not always what it is willing to do.