The United States Court of Appeals for the Eleventh Circuit just recently held that an officer of a nationally-chartered bank regulated by the National Bank Act (NBA) had no claim for wrongful termination under a Florida whistleblower statute. According to the federal court, the state-law whistleblower claims were preempted by 12 U.S.C. § 24 (Fifth) of the NBA, which gives a national bank the power to dismiss bank officers “at the pleasure” of the board of directors. Consistent with decisions by other federal circuits, the Eleventh Circuit interpreted “at the pleasure” to be equivalent to at-will employment and held that the Florida whistleblower statute at issue was preempted because, contrary to the nature of at-will employment, it prohibited dismissal of an employee for complaining about certain improper activities by an employer. Further, there was no comparable employment protection in federal law (e.g., Title VII) that would indicate congressional intent not to preempt the Florida statute through 12 U.S.C. § 24 (Fifth) of the NBA. This is a useful employment law decision for national banks that helps preserve their freedom to employ, or not employ, their officers as they see fit and avoid certain types of miscellaneous wrongful termination lawsuits under state law. Below are the details.
Background on the Case
The case is Wiersum v. U.S. Bank, N.A., No. 14-12289, 2015 U.S. App. LEXIS 7436 (11th Cir. May 5, 2015). It involved Marc Wiersum, who was employed by U.S. Bank, N.A. (“US Bank”) as a Vice President and Wealth …
There is much to like in the recently released report of the Volcker Alliance. Unfortunately, however, there is little discussion of those banking institutions commonly referred to as community banks.
At roughly the same time last month, the Independent Community Bankers Association of America highlighted in a press release the importance of community banks in helping small businesses gain financial stability. The release said there are roughly:
6,000 community banks, including commercial banks, thrifts, stock and mutual savings institutions. Assets may range from less than $10 million to $10 billion or more. Across the nation, community banks operate 52,000 locations, employ 700,000 Americans and hold $3.6 trillion in assets, $2.9 trillion in deposits and $2.4 trillion in loans to consumers, small businesses and the agricultural community.
The relative unimportance of the community banking industry, notwithstanding employment of roughly 700,000 people, to those who prepared the Volcker Alliance report on regulatory reform suggests just how concentrated in large banking organizations the financial services industry has become following the Great Recession. The draftsmen just had bigger fish to fry.
Implementation of the Volcker Alliance report’s recommendations would benefit community banks in two main ways. First, the role of the Federal Reserve as the primary banking industry regulatory would be clarified and limited to monetary policy and the drafting of financial regulations. Second, and perhaps most significant, regulatory consolidation would result in one supervising regulatory agency referred to in the report as the PSA (Prudential Supervisory Agency). All of …
Late last year, the FDIC released guidance on brokered deposits in the form of a series of frequently asked questions and answers (FAQs). The guidance is available here: https://www.fdic.gov/news/news/financial/2015/fil15002a.pdf
The ostensible purpose of the guidance is to collect previously scattered views on various questions related to two primary subjects: what are brokered deposits and how they should be reflected on bank call reports. Brokered deposits impact assessments for deposit insurance. For some institutions, the FAQs may have little impact but for others the FAQs will be important and required reading.
Although the FDIC called the release “guidance,” some commentators have suggested the material contains the first expression by the agency on a number of issues, including in particular further discussion on an important exception to the definition of deposit broker, the so-called “primary purpose exception” discussed below.
The basic regulation of brokered deposits has been clear for some time. Under Section 29 of the Federal Deposit Insurance Act, a brokered deposit is any deposit obtained through a deposit broker. So the definition of deposit broker is critical. Essentially, the term means any person engaged in the business of placing or facilitating the placement of deposits of third parties with insured depository institutions. There are a number of specific exceptions however.
Under the current deposit broker regulatory scheme, only a bank that is “well capitalized” may accept, renew or rollover broker deposits. See 12 C.F.R. §337.6. “Adequately capitalized” financial institutions can do so if they have been granted a waiver by …