Advanta Bank v. Federal Deposit Insurance Corp.
- Practice Area(s): Banking, Bank Regulatory, Government Enforcement, Litigation
- Attorney(s): Sandler, Andrew L.; Buckley, Jeremiah S.; Prieto, Liana R.
- Case Date(s): 2010
- Court: D.D.C.
- State: Dist. of Columbia
- Docket No. 684 F. Supp. 2d 17
Representation of Advanta Bank in a groundbreaking, successful challenge to the authority of the FDIC to issue a temporary cease and desist order. Advanta Bank maintained that the FDIC's motivation for commencing the enforcement action and issuing the order was to improperly freeze the Bank's assets pending a cross-guarantee claim based on the potential failure of an affiliated institution. Because the alleged unsafe or unsound practices were not the cause of any "dissipation" of assets, the U.S. District Court for the District of Columbia held “the FDIC acted outside the clear boundaries of Section1818(c) authority in issuing the temporary cease-and-desist order," and enjoined it from enforcing the temporary order. In reaching its decision, the court noted that challenges to the banking agencies' authority are rare, and successful challenges even more so. Also negotiated a favorable settlement of parallel administrative proceedings, which included a release form liability for Advanta, its directors, officers and employees and a dismissal of the FDIC's appeal of the district court judgment.