What Big Banks Giveth Can they Taketh Away?

February 27, 2019 at 8:36 am Leave a comment

As fans of the blog know, I have been highly complementary of NCUA’s efforts to get back money from the banking behemoths who peddled the securities which brought down the corporate system and cost credit unions billions of dollars. NCUA’s efforts have been a model for other regulators and saved all credit unions money. BUT, and you knew a but was coming didn’t you, it appears that we aren’t quite out of the woods yet when it comes to this litigation. Many of the banks with which NCUA reached settlements with are now suing NCUA claiming that it has breached its obligations under the settlement agreements. Specifically, these lawsuits claim that NCUA has not done enough to protect or deter third-parties from bringing lawsuits against these banks.

What makes the case even more interesting from a New York State perspective is that they hinge on the application of New York State contract law. Why is this intriguing to me? Because there isn’t a credit union or company in the state that hasn’t agreed to boiler plate language at some point “requiring them to act in good faith.” What exactly does that mean? When is this language violated? It’s one of those things you ultimately can’t describe because it is so fact sensitive but you know it when you see it. Or so the banks are going to argue.

Another question that remains to be seen is how much money is at stake in this litigation. The banks are basically arguing that they should get some of their money back from NCUA because it hasn’t kept up its side of the settlement bargain.

Latest Facebook Troubles Embody Data Privacy Debate

Earlier this week Governor Cuomo directed the Department of Financial Services and other state agencies to “immediately investigate” allegations that Facebook is accessing people’s personal data off their cell phones. The allegations over Facebook and the Governor’s understandable reaction to it underscores why I think we are so close but yet maybe so far from an acting federal data privacy protections. We are close because people have finally woken up to the fact that some of their most personal data is being collected and sold to third parties and that this might actually be a bad thing.

Another reason we are so close is because if you are a company like Facebook, would you rather have a single set of federal regulations to deal with or 50 state regulations? This is particularly true when you consider that California and New York are arguably much more aggressive in seeking to police data privacy and security than the federal government has been.

Why do you I think we are so far? Because the grand bargain here has to be a national standard which preempts state law. It will be interesting to see if such a bargain will ever be able to make it through the house.

Entry filed under: Legal Watch, New York State. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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