If the car had already been repossessed--that is, title to or ownership of the car had been transferred to the bank prior to your run-in with the police--then this would not have been a civil matter, but a criminal one: once the bank is the legal owner of the car, then it is theft if you take/drive their car without permission. I suspect that this is what happened--or at least was the state of affairs that the police believed existed: that it had been reported to them that you were driving a car which did not beling to you--since you are correct: the police do NOT intervene in civil matters between third parties. They have no authority to do so.