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From Banking and Finance Law Daily, August 3, 2017

MetLife appeal still on hold; OCC seeks dismissal; AG’s opinion sought

By John M. Pachkowski, J.D.

There have been several recent developments with litigation involving the Consumer Financial Protection Bureau, Financial Stability Oversight Council, and Office of the Comptroller of the Currency in the federal court system.

MetLife appeal. The U.S. Court of Appeals for the District of Columbia has ordered that the appeal by the Financial Stability Oversight Council, which sought to reverse a lower court decision that rescinded FSOC’s designation of MetLife, Inc. as a systemically important financial institution (SIFI), be held in abeyance until further ordered by the court.

Metlife had sought to extend the 60-day abeyance period through the issuance of the Treasury Secretary’s forthcoming report on the SIFI designation process. The deadline for the report is Oct. 18, 2017. FSOC had requested the court to extend a previously ordered60-day abeyance period for 30 additional days, to enable Council members to discuss the appeal and its relationship to President Donald Trump’s directive that the Treasury Department report on the SIFI designation process (see Banking and Finance Law DailyJuly 7, 2017 and July 12, 2017).

The court also directed the parties to file motions to govern future proceedings in the case by Nov.17, 2017, or within 30 days of the issuance of the Secretary’s report on the FSOC’s designation process, whichever first occurs.

Ocwen constitutional challenge. A federal court in Florida issued an order inviting the views of the Attorney General of the United States on a constitutional challenge to the structure of the CFPB. The challenge was brought by Ocwen Financial Corporation, and two of its subsidiaries, Ocwen Mortgage Servicing, Inc. and Ocwen Loan Servicing, LLC, as a part of a lawsuit filed by the Bureau alleging that the Ocwen companies violated the Consumer Financial Protection Act UDAAP provisions, Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act, Truth in Lending Act, Homeowners Protection Act, and related implementing regulations (see Banking and Finance Law Daily, June 5, 2017).

Earlier the court ruled on Ocwen’s April 2017 Motion and Incorporated Memorandum to Invite the Views of the Attorney General of the United States-. The court found that it was "premature" to invite the views of the AG in the proceedings because: (i) Ocwen had only "indicated an intent to launch a constitutional challenge" rather than an actual, presented challenge; and (ii) the AG presently does not have sufficient information about the "exact basis for the challenge" to make an informed decision about whether to intervene in the litigation.

The court’s latest order requires the Attorney General to submit a brief no longer than 20 pages in length on or before Oct. 2, 2017, addressing the constitutional challenges raised by the Ocwen companies. The CFPB is also permitted to file a response brief no longer than 20 pages in length on or before Oct.16, 2017.

CSBS fintech lawsuit. Finally, the OCC has filed a motion to dismiss a lawsuit brought against the agency by the Conference of State Bank Supervisors. The CSBS filed its April 2017 lawsuit in U.S. District Court for the District of Columbia in an attempt to block the OCC from creating a new special-purpose fintech charter. The CSBS alleged that OCC’s new charter would exceed the agency’s authority under the National Bank Act. The CSBS’s complaint also alleged that OCC has engaged in improper rulemaking since the agency failed to follow the requirements of the Administrative Procedures Act and that the agency’s acts were arbitrary and capricious (see Banking and Finance Law Daily, April 26, 2017).

In seeking dismissal of the CSBS’s lawsuit, the OCC argues that the court lacks jurisdiction and that the CSBS failed to state a state a claim upon which relief can be granted. As for the jurisdictional claim, the OCC contends that the CSBS lacks Article III standing in that the CSBS did not show cognizable harm to itself or its members. The OCC also argued that the CSBS did not state a claim upon which relief can be granted since the agency had not taken any final agency action.

Companies: Conference of State Bank Supervisors; MetLife, Inc.; Ocwen Financial Corporation; Ocwen Loan Servicing, LLC; Ocwen Mortgage Servicing, Inc.

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