Supreme Court Stays Order Barring Executive From Banking Industry

By Matthew Vadum
Matthew Vadum
Matthew Vadum
contributor
Matthew Vadum is an award-winning investigative journalist and a recognized expert in left-wing activism.
September 30, 2022 Updated: September 30, 2022

The Supreme Court has put a banker’s lifetime ban from the industry on hold while he pursues an appeal over the ban.

The order (pdf), which also stays a $125,000 fine, came late on Sept. 29 in Calcutt v. Federal Deposit Insurance Corp. (FDIC), court file 22A255.

Justice Brett Kavanaugh issued the order without referring the matter to the full court. He provided no reasons for his decision.

The order states that if the banker’s petition to the high court is denied, “this stay shall terminate automatically.”

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-based Northwestern Bank, be prohibited from working in the industry and assessed a civil financial penalty under the Federal Deposit Insurance Act.

Calcutt allegedly participated in improper lending practices that led his small bank to incur more than $8 million in losses.

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

In June, the U.S. Court of Appeals for the 6th Circuit turned down Calcutt’s appeal.

According to Calcutt’s filing with the high court, the FDIC issued “a legally flawed agency order,” and the 6th Circuit erred in failing “to ferret out record facts that might support the agency’s judgment on other grounds.”

This approach “contravenes this Court’s precedents and opens a glaring circuit split with every other court of appeals on a fundamental question of administrative law that arises in virtually every case involving judicial review of agency action,” the filing states.

“And the Sixth Circuit’s no-remand ruling is so patently incorrect that even the FDIC agreed a remand was warranted, at least to let the agency ‘decide whether the effects properly considered under the panel’s legal standard … support prohibition,’” the filing states, quoting a legal brief filed in the case.

Calcutt’s attorneys have argued that because the FDIC’s board members are appointed by the president to fixed terms, but may not be removed at the will of president, they are not politically accountable, which calls into question the constitutionality of the board’s structure.

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

The CFPB was designed to be free of the influence of the president. Federal law blocked the president from dismissing its director, who has to be confirmed by the U.S. Senate, before that person’s five-year term lapses, unless the termination is for “inefficiency, neglect of duty, or malfeasance in office.”

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

The Epoch Times reached out for comment to the U.S. Department of Justice but had not received a reply as of press time.

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