Late yesterday, Tuesday February 8th, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) received favorable court rulings in cases challenging their so-called “valid-when-made” rules. The court’s rulings granting summary judgment to the OCC and FDIC align with the amicus brief argument set forth by the Structured Finance Association and four fellow trade associations. In each case, the Plaintiffs were three states – California, Illinois and New York – challenging the validity of the rulemakings, and in each cases, the court found in favor of the Federal Agencies.
The States’ AGs alleged that both Federal Agencies violated the Administrative Procedure Act. In particular, the plaintiffs claimed that each rulemaking (1) exceeded their authority, (2) were arbitrary and capricious and (3) violated federal rulemaking standards. The District Court applied a Chevron analysis to determine that both the FDIC and OCC acted within the authority delegated by Congress, and that their actions were a permissible construction of the authorizing statute. The Court also found that the OCC correctly interpreted the National Bank Act and did not impermissibly preempt state law. Further, Plaintiffs challenged the OCC rulemaking on the grounds that it violated Madden v. Midland. Again, the Court sided with the OCC that the ruling in Madden did not preclude the OCC’s interpretation of the National Bank Act when promulgating the rule in question.
Taken together, these cases signal that the rules in question were properly set forth and promulgated by the respective Federal Agencies. Moreover, these rulings represent a successful culmination of efforts by the Structured Finance Association, our members, and the entire industry on the merits of these issues.
For more information contact Kristi Leo, President (kristi.leo@structuredfinance.org), Jen Earyes, Head of Policy (jen.earyes@structuredfinance.org) or Dallin Merrill, Policy Director (dallin.merrill@structuredfinance.org).