Banking and Finance Law Daily Wrap Up, WORTH NOTING—Other regulatory, legislative, litigation, and industry developments, (Jan 31, 2025)

By WK Editorial Staff

A weekly roundup of other items of interest to the banking and finance law community.

CONSUMER CREDIT—Iowa Sup. Ct.: In reviewing a dispute between a pair of homeowners and a roofing contractor, the Iowa Supreme Court held that the roofing contract did not constitute a “consumer credit sale” under section 537.1301(13) of the Iowa Consumer Credit Code (ICCC). Under the facts of the case, the homeowners, the Degeneffes, experienced wind and hail damage to their home and entered into a roofing contract with Home Pride Contractors, Inc. to “repair their roof, gutters, and siding.” After Home Pride completed the roofing repairs and billed the Degeneffes, “they refused to pay, leading Home Pride to hire an attorney to help collect the debt.” Later, the Degeneffes sued Home Pride, contending that the roofing contract constituted a “consumer credit sale subject to the ICCC” and that “Home Pride's conduct [via its prior attorney] was harassing and abusive as a matter of law under the ICCC.” In response, Home Pride argued that it “was not in the business of extending credit or lending money to its customers and thus was not subject to the ICCC.” In analyzing the applicable ICCC provisions, the state’s high court agreed with Home Pride that (i) the company never “granted credit” to the Degeneffes; and (ii) the interest charged by Home Pride to the Degeneffes could not be considered a “finance charge” under the ICCC. As a result, the court reversed the lower court’s entry of partial summary judgment in favor of the Degeneffes and remanded the case for entry of summary judgment in favor of Home Pride (Degeneffe v. Home Pride Contractors, Inc., No. 23–1510 (Iowa Sup. Ct. Jan. 24, 2025)).

DODD-FRANK ACT—5th Cir.: The U.S. Court of Appeals for the Fifth Circuit has vacated the Federal Trade Commission’s “Combatting Auto Retail Scams’ (CARS)” Rule after finding that the Commission violated its own regulations by failing to issue an advance notice of proposed rulemaking as required by the FTC Act. The Commission cited a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act as the authority for relaxing statutory procedures to be followed when promulgating rules regulating motor vehicle dealers. However, the court found that § 18(a)(1)(B) of the FTC Act applied rather than the Dodd-Frank Act, because the Dodd-Frank Act did not—as the FTC contended—give the Commission a clear directive to use regular APA procedures; rather, it merely “authorized” the Commission to do so (National Automobile Dealers Association v. FTC, No. 24-60013 (5th Cir. Jan. 27, 2025)).

FEDERAL RESERVE SYSTEM—The Federal Open Market Committee (FOMC) voted unanimously to maintain rates at its January 29 meeting, according to a Federal Reserve announcement. In its official statement, the FOMC noted that unemployment stabilized at a low level, while inflation remained “somewhat elevated” amidst an “uncertain” economic outlook. The decision keeps the federal fund rate at a target range a 4.25-4.5 percent. Senate Banking Committee ranking member Elizabeth Warren (D-Mass.) said that Fed Chair Powell “is putting Americans’ jobs at risk and making it more difficult for families across the country to afford a home or pay off their credit card bill.” She urged the Fed to cut interest rates further.

LAW FIRM NEWS—Shumaker announced the return of Partner Jade Davis to its data privacy, cybersecurity, and artificial intelligence (AI) governance team. Davis brings a wealth of experience to help clients navigate the complexities of data protection, cybersecurity, and AI regulation. “Jade is an exceptional attorney whose experience adds tremendous value to our team and clients,” said Doug Cherry, Shumaker Partner, Intellectual Property and Technology Regional Service Line Leader, and Technology Industry Sector Co-Chair. “Her strategic mindset and deep understanding of data protection laws ensure we continue to provide innovative solutions in this rapidly evolving area of law.”

LOANS—U.S.: The U.S. Supreme Court has denied a petition for a writ of certiorari in Louis v. Bluegreen Vacations Unlimited, Inc. (Sup. Ct. Docket No. 24-453). In the underlying case, a couple (the Louises) bought a timeshare from Bluegreen Vacations Unlimited and contended that Bluegreen violated the Military Lending Act (MLA) by not giving them the required disclosures and by including an arbitration provision in their financing agreement. The federal district court dismissed their case for lack of standing. The Louises then appealed that decision to the U.S. Court of Appeals for the Eleventh Circuit, and the CFPB and FTC filed a joint amicus brief in support of their stance. In an unpublished decision, the Eleventh Circuit affirmed the lower court’s ruling, determining that the Louises did not have standing to file their lawsuit under the MLA because they “failed to allege an injury traceable to the alleged MLA violations.” Appealing that decision to the U.S. Supreme Court, the Louises asked in their petition, “Do plaintiffs who paid money under a void contract have Article III standing to challenge the enforcement of that contract and seek restitution of their payment in federal court?” The Louises contended that the applicable consumer loan contract should be deemed void at its inception and unenforceable as violative of the MLA. They argued that the Eleventh Circuit’s ruling and rationale not only did not comport with the MLA, but also was at odds with other federal appellate courts addressing the issue (see Banking and Finance Law Daily, Oct. 24, 2024).

MERGERS AND ACQUISITIONS—The Federal Deposit Insurance Corporation announced approval of a Bank Merger Act (BMA) application January 24, between Wheeling, W.V.-based WesBanco Bank and Youngstown, Ohio-based Premier Bank. The merger—which would still require additional approvals and/or non-objections from federal and state regulatory authorities—would create a bank operating under the WesBanco Bank name in Indiana, Kentucky, Maryland, Michigan, Pennsylvania, Ohio and West Virginia. The announcement noted that improvement of the BMA approval process was a “high priority” of the agency under acting Chair Travis Hill.

OVERSIGHT AND INVESTIGATIONS—Democrats in the House of Representatives pushed the White House to reverse its late-night firing of over a dozen inspectors general (IGs), in a letter date January 25. The letter noted the firings violated laws requiring “substantive rationale, including detailed, case-specific reasons” for IG removals and 30 days notice to Congress prior. The White House sent emails to the IGs late on Jan. 24, justifying their terminations, effective “immediately,” as being related to “changing priorities,” according to the letter signed Financial Services Committee’s ranking democrat Maxine Waters (D-Cal.) and 20 others. “Firing inspectors general without due cause is antithetical to good government, undermines the proper stewardship of taxpayer dollars, and degrades the federal government’s ability to function effectively and efficiently,” the group wrote. “We urge you to withdraw your unlawful action and comply with your obligations to the American people.”

Attorneys: Attorneys: Matthew W.H. Wessler and Jennifer Dale Bennett (Gupta Wessler LLP) for Emmanuel G. Louis. Grace Lee Mead (Stearns Weaver Miller) for Bluegreen Vacations Unlimited, Inc. Matthew E. Laughlin (Dentons Davis Brown PC) for Lance Allen Degeneffe. Brian P. Rickert (Brown, Winick, Graves, Gross, and Baskerville, P.L.C.) for Home Pride Contractors, Inc. Jeffrey Matthew Harris (Consovoy McCarthy, P.L.L.C.) for National Automobile Dealers Association. Benjamin Aiken for the FTC.

Companies: Bluegreen Vacations Unlimited, Inc.; Home Pride Contractors, Inc.; National Automobile Dealers Association

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