WASHINGTON — A coalition of civil rights groups condemned the practice of "judge-shopping" in a high-stakes case brought by banking and business groups against new anti-redlining rules by federal regulators.
The referenced case, filed in the Northern District of Texas, targets recent updates to the implementing rules of the Community Reinvestment Act, a class of regulatory rules aimed to combat discrimination in housing and ensure financial institutions invest in low- and moderate-income neighborhoods.
"Judge-shopping adversely affects the public's interests by creating the appearance of unfairness in the eyes of interested parties," the brief asserts, warning that it "undermines public confidence in the impartiality of judicial proceedings."
The brief was submitted by the National Fair Housing Alliance, the National Urban League, the National Coalition on Black Civic Participation, UnidosUS and the Raza Development Fund.
The brief calls for vacating a preliminary injunction granted by the District Court in March, arguing plaintiffs chose the venue for the purpose of intentionally delaying the rule's enforcement. They urge the Court of Appeals to reverse the injunction and either transfer the case to a more appropriate jurisdiction — such as Washington, D.C., where the nationwide trade groups leading the lawsuit are headquartered.
The Northern District of Texas, particularly in Amarillo, doesn't assign cases randomly. Instead, the district itself, under the authority of its chief judge, determines how cases are assigned, often directing them to a single judge rather than distributing them randomly.
"Judge-shopping is only possible in a few judicial divisions where all cases are assigned to one judge; most judicial districts and divisions randomly assign judges to cases, for important reasons," the brief noted. "Random assignment of judges to cases is 'essential to maintaining public confidence in the impartiality of judicial proceedings.'"
The CRA lawsuit argues that the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency arbitrarily exceeded their statutory authority when they finalized their amendments to the CRA rules in October. The rule is the first such reform to the implementation rules of the 1977 anti-redlining law since the 1990s. Since then, a federal judge in Texas issued a preliminary injunction against enforcing new rules pending the outcome of the case.
The plaintiffs argue that the final rules unnecessarily heighten the complexity and compliance burden of the CRA, ultimately undermining its very intent — to compel banks to serve the needs of the lower-income communities they serve.
Banks have long complained about aspects of the existing CRA regime for years, and opposed aspects of the rule since it was unveiled last fall. But it was uncertain that their opposition would culminate in a lawsuit, in part because the new rule included some provisions that banks have long sought, including a pre-approved list of activities that banks can get CRA credit for.
Masrani, who's been at the helm of the Toronto-based bank for a decade, will pass the torch to Raymond Chun next spring. Chun currently serves as TD's head of Canadian personal banking.
Agencies must now provide clearer justifications for their interpretations, while Congress needs to draft more precise legislation. The decision could empower banks to challenge agency rules more frequently and potentially prolong regulatory processes, with courts giving less deference to agency interpretations.
A huge amount of money has flowed into the election from cryptocurrency interests, setting up a different financial policy scene, including for bankers, next year.
In a new lawsuit, a former BMO employee says he was fired because he reported his concern that the bank was intentionally charging too much to clients who used a foreign-exchange product. BMO denies the allegations.
As Silvergate Capital filed for Chapter 11 bankruptcy protection, an executive said the company's crypto-friendly bank went down last year because regulators soured on its business model.
The Federal Reserve chair said he supports the revised proposal outlined by Vice Chair for Supervision Michael Barr and said the new proposal would get a vote by the full Board of Governors early next year.