Banking Law

A couple of quick hits for those non-government employees who haven't the advantage of "Flex Days" and actually show up for work on Friday to read this blog:

• Baltimore had its latest amended complaint against Wells Fargo dismissed by Judge Motz. He gave them another month to try again, apparently on the theory that the old saw "Third Time's The Charm" might actually be true. The judge keeps narrowing the filed of permissible claims, yet the city can't limbo under the bar no matter how high he raises it. Nevertheless, as I said in January when the initial complaint was dismissed, the city's not likely to quit trying until the contingency-fee trial lawyers that are representing the city run out of gas. The strategy for Wells Fargo has been thus far (and should continue to be) no settlement, not now, not ever. On the plus side (as far as banks are concerned), losses like this bode poorly for the success of similar lawsuits against lenders filed by other cities that followed Baltimore's lead (paid subscription required).
  

  Jeff Taft, a partner at the law firm Mayer Brown LLP in Washington, said the ruling diminishes the chances for similar cases against other banks. "Everybody thought at one point that there might be a lot of these lawsuits," he said. "But the lack of success by those who have brought the lawsuits and the difficulties in making a strong legal case has likely prevented others from bringing similar lawsuits."

• I received inquiries from readers about what I thought of President Obama's decision to appoint Elizabeth Warren as a special adviser to Secretary Geithner with the job of getting the CFPB up and running. He thereby avoided any confrontation with the Senate over her confirmation as director of the CFPB, but that's the position I think she really desires (notwithstanding her protestations to the contrary) and that her supporters wish she'd assume. My initial reaction is that it's a smart move by a crafty politician. He'll get Warren in the de facto driver's seat, which ought to tamp down the heat that's been put on him by liberal and consumer activists. As to making a recess appointment of Warren to officially head the CFPB, I think that what some sources in D.C. have speculated might have some merit. Assuming that Obama's worried about Warren's ability to be confirmed by the Senate, he's likely to make a recess appointment, which will expire at the end of the next session of the Senate after the appointment is made. If he makes the appointment during the next "intersession" recess (for example, right after the end of the second session of the 111th Congress this fall), she could serve only until the end of the first session of the 112th Congress in the fall of 2011. If he waits until the start of the first session of the 112th Congress next January and makes an "intrasession" during one the the first recesses of the the first session of that Congress (say in February or March of 2011), she'd get to serve until the end of the second session of the 112th Congress in the fall of 2012, without the necessity of being confirmed. That would be a slick maneuver politically and one certain to enrage bankers and Republicans (and some moderate Democrats), but that's never been an impediment that's hindered the current administration. This is all idle speculation, of course, but it passes the time. Read more about recess appointments here. President Bush was a big believer in them, by the way, and used them with gusto, even when his party controlled the Senate.