Banking Law
Bailout Bill Allows Lawsuits Against Treasury, Banks
Posted Oct 6, 2008, 12:56 pm CDT
By Debra Cassens Weiss
The $700 billion bailout bill passed by Congress last week allows damage suits against the Treasury Department for any misconduct in the distribution of aid.
The original plan advanced by the administration would have shielded the department from judicial review. The new plan permits damage suits but not injunctions because of fears that lawsuits could delay needed aid, the Daily Journal reports (sub. req.).
The provisions allow review of actions by the Treasury Secretary that are "arbitrary, capricious, an abuse of discretion, or not in accordance with law.” Specifics about standing to sue and venue are not included in the bill, the Daily Journal story says.
Rex Heinke, an appellate partner with Akin Gump Strauss Hauer & Feld, told the publication he expects a lot of litigation because the judicial review section is so vague.
The bill also bars the Treasury Secretary from extinguishing private shareholder or truth-in-lending lawsuits against financial institutions, according to a statement by Senate Judiciary Chairman Patrick Leahy.
A provision to allow bankruptcy judges to rewrite mortgages was left out of the bill, however.
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