The American Bankers Association is trying to block an effort by class-action lawyers to sue financial institutions under the Bank Holding Company Act.
In a brief filed with the U.S. Court of Appeals for the 11th Circuit, the ABA said only the government has been able to sue banks for alleged violations of this law.
Congress revised the act in 1989 to give regulators the authority to fine banks that were operating in an unsafe and unsound manner, according to W. Stell Huie, a partner in the Atlanta law firm of Long, Aldridge & Norman. Lawmakers had no intention of letting consumers use the law, he said. Rather, they considered the law to be another tool regulators could use to protect the industry's health, he said.
Michael Crotty, the ABA's deputy general counsel for litigation, said consumer lawyers are just going after big money; federal courts are allowed to triple damage awards. "This is another typical plaintiff class-action bar effort to federalize traditional state law and raise the settlement value of cases," he said.
Oral arguments are expected this fall in Baggett v. First National Bank of Gainesville.