In November of 2012, an administrative law judge recommended that all charges brought by the Comptroller of the Currency against Patrick Adams, the former CEO of Dallas-based T-Bank, be dismissed. As we noted at that time, the road to vindication for Mr. Adams was long, hard, and expensive. What's shocking to us is that the long road is still not finished for Mr. Adams, notwithstanding the fact that ALJ found against the OCC on every one of its allegations, and, more critically, that although 12 CFR 109.40 provides that the Comptroller "shall render a final decision within 90 days after notification of the parties that the case has been submitted for final decision" (final submission was in early April 2013), the Comptroller has failed to render such a decision. Instead, the Comptroller has extended the 90-day period four times, most recently in May of this year, despite, according to a former OCC Deputy General Counsel who helped draft the OCC's enforcement procedures, no apparent authority to do so.
The troublesome nature of this process was recently discussed by attorneys Jerry Buckley, Robert Serino and Ann Wiles in an article for Consumer Financial Services Law Report. As noted in the opening paragraph, "Mr. Serino was formerly deputy chief counsel of the Office of the Comptroller of the Currency and established that agency’s enforcement program." Thus, their comments are not merely the rantings of a man once described by a reporter for a trade press rag as "a Texas curmudgeon." They are expressions of concern by people with knowledge of the process, one of whom had a hand in crafting the process that's being abused.
While focusing on general concerns in addition to Mr. Adams' specific case, the authors spend time discussing Adams' situation because, as they put it, it highlights the need for "additional procedural protections" to protect an individual facing enforcement action by a federal banking agency. They do a good job of running through the sequence of events, and the various facts that concerned the ALJ prior to making his decision, so I won't reiterate all of them. You can (and I encourage you to) read them in the linked article. At this point, the most disconcerting injustice to me is the failure of the Comptroller to issue a final decision "despite a statutory requirement to do so within 90 days."
But others would argue that the case against Mr. Adams highlights a lack of procedural protections for individuals who may suffer significant reputational harm, damage to their careers, and significant expense in defending themselves, only for it to be ultimately found that an enforcement action was not warranted.
By "others," the authors can include me and other bank regulatory attorneys I've heard from on this matter, including other former federal bank regulatory agency attorneys who are now in private practice. They can also include Texas Representative Pete Sessions, Chairman of the US House of Representatives Rules Committee, who, on June 20, 2014, sent the Inspector General of the Treasury Department a letter that requests an investigation by the IG into the handling of Mr. Adams' case.
It's irrelevant what OCC supervisory and enforcement personnel think of Mr. Adams. What's critical to the functioning of a process that claims to be "due" and "fair" is that the rules be followed by the government. A regulatory body that seeks to enforce the law but fails to follow it lacks credibility. The members of that agency who fail to follow the law deserve an Inspector General's investigation and any consequences to them that result. If that view engenders more anonymous troll-like hate mail that threatens me with regulatory retaliation and violates federal law, as was the case the last time I criticized the OCC, then I'll risk it.
The ALJ determined that the charges should not have been brought. We all realize that the OCC likely doesn't agree with that determination, but the Comptroller could have issued a decision within 90 days that decided not to follow that ruling. Then, Mr. Adams could have appealed that decision and had a resolution. Instead, by failing to follow its own rules, the OCC keeps the man in limbo indefinitely. Under whose sense of fundamental fairness is this appropriate? Vladamir Putin's?
I'll close with the same paragraph I used in my November 2012 post on this subject, because I still wonder where the government's lawyers who are involved in this matter stand. Do they really think that this is the way to handle this? Do they really think that this is fair and reasonable?
As I've contended previously, with great power comes great responsibility. When you have the power to ruin an individual's life, you need to make damn sure that you're doing "the right thing" before you start down that road. I don't see any concern with that "aspirational goal" in this case.
On the other hand, I think it's always useful for both government attorneys and those who oppose them to keep in mind the following ethical consideration, which, though "aspirational" in nature and part of the since-replaced Model Code of Professional Responsibility, embodies what the legal profession has long held to be proper conduct by those lawyers who wield the power to wreak havoc on the lives of the regulated:EC 7-14 A government lawyer who has discretionary power relative to litigation should refrain from instituting or continuing litigation that is obviously unfair. A government lawyer not having such discretionary power who believes there is lack of merit in a controversy submitted to him should so advise his superiors and recommend the avoidance of unfair litigation. A government lawyer in a civil action or administrative proceeding has the responsibility to seek justice and to develop a full and fair record, and he should not use his position or the economic power of the government to harass parties or to bring about unjust settlements or results.