The Supreme Court, delaying a case that will determine whether banks can be forced to disclose exam reports, has asked the solicitor general to weigh in.
The solicitor general will likely take at least a month to file a brief in the case, which would postpone until February the high court's decision to take or reject the case. If the court does accept the case, oral arguments wouldn't occur until the fall and a decision would not be out until early next winter.
The case pits Bankers Trust New York Corp. against Procter & Gamble Co., which is suing the bank over losses caused by derivatives. P&G wants to use the exam reports against the bank.
Bankers Trust spokesman Tom Parisi said the bank won't comment until after the government files its brief.
A federal appeals court in Cincinnati ruled in August 1995 that Bankers Trust had to release the exam reports during discovery, the fact-gathering process that precedes a trial. The decision contradicted other courts, which have ruled that exam reports belong to the bank's regulator. These courts have required litigants to get the records from the regulator.
The agencies have been reluctant to release the reports, often requiring the litigants to ask the U.S. Court of Appeals for the District of Columbia to intervene. This can be a costly and time-consuming process.
The banking trade groups filed a brief in November urging the Supreme Court to accept the Bankers Trust case. They said bankers would be less forthright with examiners if they knew a litigant could obtain the information. This possibility could jeopardize the safety of the banking system, they argued. The banking agencies also want the reports protected.
Gil Schwartz, a partner at Schwartz & Ballen, a Washington law firm, said the court's request for the solicitor general's view bodes well for banks. "Given the significance of this matter, I would expect the solicitor general to fully and strongly support taking this case," he said.
Separately, the Supreme Court agreed Friday to decide if a Connecticut firm can enforce a mandatory arbitration agreement against a Montana consumer.
Arbitration has become increasingly important to the banking industry. Institutions routinely include agreements in contracts with customers forcing grievances to arbitration rather than allowing the customer to sue the bank.
Based on a 1995 ruling in a similar lawsuit, the court is expected to bar Montana from regulating out-of-state arbitration agreements in this case, Doctor's Associates v. Casarotto.