Banking Bill Gives Agencies More Legal Clout
Seiberg, Jaret, American Banker
WASHINGTON -- When the Federal Reserve was called into court in the mid-1980s to defend the membership structure of its key monetary policy committee, it was forced to seek help from the Department of Justice.
Michael Bradfield, the central bank's general counsel at the time, said federal law prevented him from representing the Fed before a judge.
Instead, he said, he had to endure rancorous battles with Justice as he tried to explain the Fed's position.
While Justice eventually did provide an effective defense for the Fed, Mr. Bradfield said the case could have been handled much more easily if the central bank had represented itself in court.
And if President Clinton signs the Riegle Community Development and Regulatory Improvement Act - as he is expected to do - Mr. Bradfield's successors will get to do just that.
The bill, which passed Congress last month, gives the Fed, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. the right to litigate nearly all of their own cases.
The agencies, just like the Office of Thrift Supervision (which already possesses the power) still must yield to the solicitor general's views when appealing to the Supreme Court.
The legislation also allows the OCC and OTS to approve regulations without first getting the Treasury Department's approval.
Officials at the Fed and OCC declined to comment. Officials at the FDIC could not be reached for comment.
But former litigators at the agencies were united in support.
"They have finally let my people go," said Mr. Bradfield, now a partner at the Washington law firm of Jones, Day, Reavis & Pogue.
He said the litigating authority is entirely consistent with the Fed's independent status. He also said Congress' action matched moves in other countries to give regulators more independence.
The legislation will affect the FDIC less than the other agencies because the insurer already handles most of its own cases, said John Douglas, the agency's former counsel who now works at Alston & Bird in Atlanta.
"It's clear they exercised it, even if they didn't have it," Mr. Douglas said of the FDIC's litigation authority. …