Supreme Court stays order barring banking executive

The Supreme Court has suspended an industry banker’s lifetime ban while he pursues an appeal against the ban.

The order (pdf), which also upholds a fine of $125,000, came late September 29 in Calcutt v. Federal Deposit Insurance Corp. (FDIC), Court File 22A255.

Judge Brett Kavanaugh issued the order without returning the case to the full court. He did not give reasons for his decision.

The order states that if the banker’s application to the High Court is dismissed, “this stay will automatically end”.

Administrative Law Judge Christopher B. McNeil recommended on April 3, 2020 that Harry C. Calcutt III, the former president and CEO of Traverse City, Michigan, Northwestern Bank, be banned from working in the industry and a imposed a civil financial penalty under the Federal Deposit Insurance Act.

Calcutt allegedly participated in improper lending practices that resulted in his small bank suffering losses of more than $8 million.

Calcutt “engaged in dangerous and unsound banking practices and breached its fiduciary duties to the Bank by increasing the Bank’s exposure to its largest borrower relationship to enable borrowers to make payments on their existing loans, while concealing the true nature of transactions from the Bank’s board of directors and its regulators,” according to an FDIC enforcement order (pdf) dated December 15, 2020.

In June, the United States Court of Appeals for the 6th Circuit dismissed Calcutt’s appeal.

According to Calcutt’s High Court filing, the FDIC issued “a legally flawed agency order,” and the 6th Circuit erred in failing “to unearth recorded facts that could support the agency’s judgment.” for other reasons”.

This approach “contravenes the precedents of this Court and opens a blatantly divided circuit with all other courts of appeal on a fundamental question of administrative law which arises in virtually all cases involving judicial review of the action of an agency “, says the folder.

“And the Sixth Circuit’s non-referral ruling is so blatantly incorrect that even the FDIC agreed that a referral was warranted, at least to let the agency ‘decide whether the properly considered effects under the panel’s legal standard… argue ban,” the filing states, citing a legal filing in the case.

The Calcutt lawyers argued that because FDIC board members are appointed by the president for fixed terms but cannot be removed at the president’s pleasure, they are not politically accountable, which questions the constitutionality of the board structure.

A similar issue was raised in Seila Law LLC v. US Consumer Financial Protection Bureau (CFPB) which the Supreme Court decided in a 5-4 decision on June 29, 2020.

The CFPB was designed to be free from the influence of the president. Federal law has prevented the president from removing his director, who must be confirmed by the U.S. Senate, before that person’s five-year term expires, unless the termination is for “inefficiency, neglect of duty, or embezzlement in his duties”.

The Supreme Court ruling found that the president had the power to fire the director at will, but refused to strike down the law authorizing the creation of the CFPB. The decision was a victory for the Trump administration at the time.

The Epoch Times has requested comment from the US Department of Justice, but had not received a response as of press time.

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Matthew Vadum is an award-winning investigative journalist and recognized expert on left-wing activism.

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