By Nate Raymond
April 18 (Reuters) - A federal appeals court judge whose son owns Citigroup stock does not need to recuse himself from hearing a lawsuit by banking industry groups challenging a rule capping credit card late fees at $8, a judicial ethics panel has concluded.
That determination was contained in an advisory opinion from the panel that was made public on Wednesday concerning whether those stock holdings meant U.S. Circuit Judge Don Willett must withdraw from hearing the challenge to the U.S. Consumer Financial Protection Bureau's new rule.
Willett, a member of the 5th U.S. Circuit Court of Appeals, turned to the U.S. Judicial Conference's Committee on Codes of Conduct for guidance after the CFPB had argued that large credit card issuers such as Citi had a financial interest in the outcome of the case that might warrant a judge's recusal.
The agency raised its concern three days after Willett, an appointee of Republican former President Donald Trump, wrote a 2-1 opinion on April 5 holding that a trial judge wrongly transferred the case from Fort Worth, Texas, to Washington, D.C.
Politico had after the ruling reported on Willett's interest in Citi, the nation's second-largest credit card issuer and a member of the U.S. Chamber of Commerce and American Bankers Association, two groups challenging the CFPB rule.
Willett in response to that article said that investment comprised about $2,000 worth of Citigroup stock held in his son's Coverdell education savings account.
Willett is also set to be part of the three-judge panel that will hear a related request by the groups to block the rule, and his recusal would have shifted who would decide the matter.
But U.S. District Judge Gerald McHugh, serving as the acting chair of the Committee on Codes of Conduct, in the advisory opinion said the potential impact of the case on Citi's stock was, at best, "indirect and contingent."
"Even if it is true that the value of your son's stock could be affected by market forces based upon the outcome of this case, that does not by itself convert your son's stock ownership to a direct financial interest requiring recusal," McHugh wrote.
The CFPB had no immediate comment. The Chamber of Commerce did not respond to a request for comment.
At issue is a CFPB rule targeting what the agency has called "excessive" fees credit card issuers charge for late payments, which it estimated costs consumers $12 billion per year.
Under that rule, credit card issuers with more than 1 million open accounts can only charge $8 for late fees, unless they can prove higher fees are necessary to cover their costs. Issuers previously could charge up to $30 or $41 for subsequent late payments.
The case is Chamber of Commerce of the United States of America, et al, v. Consumer Financial Protection Bureau, 5th U.S. Circuit Court of Appeals, No. 24-10248.
For the plaintiffs: Michael Murray of Paul Hastings
For the CFPB: Justin Sandberg of the CFPB
Read more:
US court rejects transfer of credit card fees rule case amid focus on 'judge shopping'
Texas judge transfers lawsuit over card fees to Washington, D.C.
US judiciary says courts have discretion to adopt 'judge shopping' policy
Judge recuses from CFPB credit card fee rule case; conflicts raised
US regulator says trade groups judge-shopped for credit fee lawsuit
US consumer agency sued by banks, US Chamber over credit card late fee cap
Biden caps credit card late fees at $8, probes US healthcare takeovers
(Reporting by Nate Raymond in Boston)
((Nate.Raymond@thomsonreuters.com and Twitter @nateraymond; 347-243-6917; Reuters Messaging: nate.raymond.thomsonreuters.com@reuters.net))
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