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Jeffrey P. Naimon quoted in American Banker article, “SCOTUS ruling means less deference for bank regulators in court”

American Banker

Jeffrey P. Naimon

Jeffrey P. Naimon was quoted on July 4, 2019 in an American Banker article, “SCOTUS ruling means less deference for bank regulators in court,” which discussed the Supreme Court ruling on the Kisor v. Wilkie case that could put limitations on how federal banking regulators issue and interpret their rules. The article stated, “At issue is a case, Kisor v. Wilkie, that at least partly turned on the latitude given to the Department of Veterans — and all agencies in general — to interpret their own regulations. Banks have long argued that so-called Auer deference gives too much power to agencies to interpret vague rules however they see fit. While the high court affirmed that deference, it narrowed it by saying it could no longer be applied automatically. Instead, the court defined certain criteria that must be met for a court to apply deference, including the determination that a regulation is ‘genuinely ambiguous’ and that an agency’s interpretation is reasonable. Still, observers agreed that the ruling would have an impact, including serving as a wake-up call for agencies that previously had counted on deference to help defend a rule or guidance against a legal challenge.”

Naimon noted, “I don't think this case will create a tidal wave, but I think on the edges it could push agencies toward clarifying through rulemaking, just so there are established rules of the road, instead of using easier, less formal mechanisms like guidance.”

The article also stated, “The issue of Auer deference, and an agency's use of guidance, could come to the fore again particularly against the Consumer Financial Protection Bureau. It remains possible an institution may challenge the agency in court over its reinterpretations, especially if Democrats retake the White House and install new leadership at the bureau.” Naimon added, “You could have some much smaller companies that are not banks whose whole business models are put at risk by an aggressive CFPB interpretation, and they may ask, ‘What's my downside?’ in a court challenge to the agency interpretation.”