Conflicts of Interest Run Deep for Acting Comptroller of the Currency
WASHINGTON, D.C. – Keith Noreika, the Acting Comptroller of the Currency, has aggressively worked to undermine the Consumer Financial Protection Bureau’s (CFPB) arbitration rule. As a temporary, special government employee, Noreika is not bound by an official ethics agreement, yet he signed a voluntary ethics letter which states he will recuse himself from specific matters involving the American Bankers Association, CitiGroup, JPMorgan Chase, and Goldman Sachs.
Each of these entities have publicly opposed the CFPB’s arbitration rule with the exception of Goldman which has not stated a public position but would benefit from repeal. With that in mind, Noreika’s previous actions and ongoing review of the rule as Acting Comptroller of the Currency appear to be in violation of his voluntary ethics agreement. Considering reports that a Senate vote to repeal the rule may happen as early as this evening, it’s more important than ever to bring Noreika’s conflicts of interest to light.
“This is a clear example of the fox guarding the henhouse. Not only does Keith Noreika have a long history of representing big banks and financial interests that would benefit if the CFPB’s arbitration rule is repealed, he has argued on behalf of Wells Fargo in its past efforts to impose forced arbitration clauses. It’s no wonder he’s fighting tooth and nail to kill the Consumer Bureau’s important new rule,” said Karl Frisch, executive director of Allied Progress.
Frisch continued, “By actively challenging the CFPB’s arbitration rule, Noreika appears to be be in direct violation of his own ethics agreement. His actions on this issue raise an important question: is Keith Noreika working on behalf of consumers or big banks like Wells Fargo that used to cut his checks?”
In addition to the entities listed in his ethics agreement, Noreika has represented a who’s who of big banks and financial interests, including: Deutsche Bank, Blackstone, The Carlyle Group, The Charles Schwab Co., Goldman Sachs, IberiaBank Corporation, KKR, PNC, TD Bank, JP Morgan Securities, Navient, American Bankers Association, and Bank of America. Noreika also previously represented Wells Fargo as a senior attorney in a case where he tried, and failed, to have an arbitration agreement enforced after the bank was sued in a class action about inflating overdraft fees.
More information on Noreika:
- Noreika is serving in a temporary role, and may have already exceeded the number of days he is allowed to serve. Keith Noreika is a special government employee who became Acting Comptroller of the Currency on midnight May 5, 2017. By law, special government employees may not serve more than 130 days per 365-day period. The Center for Economic and Policy Research (CEPR) published a piece stating that September 11, 2017, marked the 130thcalendar day of Noreika’s service; the Office of Comptroller of the Currency, however, pointed to guidance from the Office of Government Ethics to argue that the statute refers to business days, not calendar days, making Noreika’s 130th business day of public service November 9, 2017. [Jesse Hamilton & Robert Schmidt, “Trump’s Newest Wall Street Watchdog Sidesteps Ethics Scrutiny,” Bloomberg, 05/10/15; “Counting Days of Service for Special Government Employees,” Office of Government Ethics, 01/19/07 and “Conflict Of Interest And The Special Government Employee,” National Institutes of Health Ethics Program, accessed 10/03/17; David Dayen, “A Top Bank Regulator is in his Job Illegally, Watchdog Argues,” Intercept, 09/12/17.]
- Noreika is bound by a voluntary ethics letter which stated that he would recuse himself from matters involving specific parties. Noreika was supposed to recuse himself from business involving the American Bankers Association, CitiGroup, JPMorgan Chase, and Goldman Sachs. [Ethics Recusal List for Keith A. Noreika, Acting Comptroller of the Currency, Office of the Comptroller of the Currency, 05/24/17]
- Many of the parties Noreika listed have actively opposed the arbitration rule. All these entities — American Bankers Association, CitiGroup, JPMorgan Chase, and (excluding Goldman Sachs) — have publicly opposed the CFPB arbitration rule. Additionally, Goldman Sachs would be subject to the CFPB arbitration rule. Noreika had an obligation to review the final rule as Comptroller of the Currency. [Rob Nichols, “ABA Statement on CFPB’s Final Arbitration Rule“, American Bankers Association, 07/10/17; Elizabeth Dexheimer, “Equifax Breach Complicates Banks’ Efforts to Fend off Lawsuits“, Bloomberg, 09/12/17; Lydia O’Neal, “Who Benefits From The Arbitration Rule, And Who Wants It Repealed?“, International Business Times, 07/12/17; Noreika Letter to Richard Cordray, 07/17/17]
- Noreika represented the following clients immediately prior to becoming Acting Comptroller of the Currency: Deutsche Bank, Blackstone, The Carlyle Group, The Charles Schwab Co., Goldman Sachs, IberiaBank Corporation, KKR, PNC, TD Bank, JP Morgan Securities, Navient, American Bankers Association, and Bank of America. [Keith A. Noreika, OGE Form, 05/05/17.]
- Noreika served as an attorney for Wells Fargo in the case of Gutierrez v. Wells Fargo Bank. The plaintiffs claimed that Wells Fargo made a processing decision “in order to increase the amount of overdraft fees by maximizing the number of overdrafts.” Wells Fargo did this by “altering the sequence of debit card withdrawals to maximize overdraft fees.” There was an arbitration clause in the customer agreement and “on appeal, Wells Fargo [sought] to compel arbitration.” The court ruled that the dispute did not need to be resolved in arbitration because Wells Fargo sought to compel arbitration at a “late stage” which is to say “post-trial, post-judgment, and post-appeal.” Noreika was further described as a “senior attorney” for Wells Fargo. [VERONICA GUTIERREZ; ERIN WALKER; WILLIAM SMITH, individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. WELLS FARGO BANK, NA, Defendant-Appellant. VERONICA GUTIERREZ; ERIN WALKER, Plaintiffs-Appellants, and WILLIAM SMITH, individually and on behalf of all others similarly situated, Plaintiff, v. WELLS FARGO BANK, NA, Defendant-Appellee., No. 10-16959, No. 10-17468, No. 10-17689 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT, 05/15/12; David Dyen, “MORE TRUMP POPULISM: HIRING A BANK LAWYER TO ATTACK CFPB BANK RULES“, The Intercept, 07/20/17.]
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