Page 6 - December 19. 2024 Bulletin
P. 6
aRTiCLeS
Report: FDIC Not Ready to authority and used deficient analysis to achieve a pre-ordained
Handle Regional Bank Failures at outcome that will ultimately harm consumers.
Time of SVB Collapse Judge Mark Pittman in Texas ordered a preliminary injunction
against enforcement of the rule after finding that the plaintiffs
The FDIC was ill-prepared to resolve large regional banks at the time were likely to succeed on the merits of the lawsuit. He also initially
of last year’s failures of Silicon Valley Bank and two other banks, with granted a CFPB request to have the case transferred to district court
the weakness magnified by the speed at which the failures occurred, in Washington. The U.S. Court of Appeals for the Fifth Circuit
the FDIC Office of Inspector General concluded in a new report. ruled in April that Pittman erred in transferring the case because his
court have already granted a temporary injunction. After further
The OIG assessed the FDIC’s readiness to resolve large regional banks legal wrangling, Pittman ruled yesterday that the case will stay in
before the failures of SVB, Signature Bank and First Republic Bank. Texas, citing federal law stating that a venue for hearing a lawsuit
The office concluded that the agency had not fully met the human against federal agencies is proper if no real property is involved in the
and technology resource needs for handling a resolution, nor had it disputed action.
sufficiently coordinated resources among its divisions and offices.
“Neither side disputes that the Fort Worth Chamber resides in
“As a result, the FDIC did not satisfy the readiness activities for the Northern District of Texas or that there is no real property in
planning, training, exercises, evaluation and monitoring consistent dispute,” Pittman ruled.
with best practices,” the OIG said in its report. “The FDIC
could have been more effective in demonstrating its readiness by Pittman also upheld the preliminary injunction, once again finding
completing, communicating and coordinating regional resolution that “the final rule clearly violates the Card Act.”
framework guidance, improving resolution plans, training key staff
on resolution roles, conducting interdivisional resolution exercises Federal Court Blocks
and evaluating and monitoring resolution readiness.” Enforcement of Beneficial
The OIG made 11 recommendations to “further mature” the Ownership Reporting Rule
FDIC’s readiness for resolving large regional bank failures. They
include improving interdivisional coordination of human and Less than a month before a Jan. 1 deadline for businesses to report
information technology resources; completing or revising resolution their beneficial owners to the Financial Crimes Enforcement
guidance, plans and agreements to address significant gaps; Network, a federal judge in Texas has issued a preliminary injunction
increasing interdivisional coordination over planning and exercises; blocking enforcement of the requirement. The order states that
and ensuring regular training of key resolution staff. The FDIC covered companies nationwide do not need to comply with the Jan.
concurred with all 11 corrective actions and plans to complete them 1 reporting deadline, unless a higher court reverses the order.
by June 30, 2026.
The lawsuit, brought by the National Federation of Independent
Read more: https://www.fdicoig.gov/news/summary- Business and several of its members, challenged the constitutionality
announcements/fdic-readiness-resolve-large-regional-banks of the Corporate Transparency Act, the 2021 bill that established
a beneficial ownership information, or BOI, registry and the
Texas Court Denies CFPB Request requirement for businesses to report. The plaintiffs argued that the
to Transfer Credit Card Late Fee CTA exceeded Congress’s authority to regulate interstate commerce,
that it violates the First Amendment by compelling speech and
Lawsuit to D.C. infringing freedom of association and that it violates the Fourth
Amendment by forcing the disclosure of private information.
A federal judge in Texas has refused a request by the CFPB to lift a
preliminary injunction blocking the bureau’s credit card late fee rule By mid-November, as the initial Jan. 1 reporting deadline
from taking effect and move the lawsuit seeking to overturn the rule approached, only about a quarter of the estimated 32.5 million
to Washington, D.C. covered businesses had registered. According to newly released poll
data from Wolters Kluwer, 37% of firms were waiting until closer to
Earlier this year, the CFPB issued a final rule to lower safe harbor the deadline and 12% said they had insufficient resources to do the
dollar amount for credit card late fees to $8 and make other changes, filing. Meanwhile, 9% of businesses believed they were not covered
citing its authority under the Credit Card Accountability and by the rule, and 32% were unsure whether the rule applied to them.
Disclosure Act, or CARD Act. The American Bankers Association,
U.S. Chamber of Commerce, the Fort Worth Chamber of Read more: https://polsinelli.gjassets.com/content/
Commerce and other parties filed a lawsuit in U.S. District Court uploads/2024/12/cta-v-garland-district-court-opinion-preliminary-
for Northern Texas, arguing the bureau exceeded its statutory injunction.pdf
6