Enforcement Update: FDIC Loses A Round

In a recent battle with its regulator, Advanta Bank (Bank), a bank subsidiary of Advanta Corp. (Advanta) that is regulated by the Federal Deposit Insurance Corporation (FDIC), won a victory over the agency, when a U.S. District Court ruled that the FDIC did not have the authority to issue a temporary cease and desist order (C&D) against the Bank. Temporary C&Ds are rarely issued by banking regulators because, among other things, they impose a heavy burden of proof on the agency due to the C&D restrictions being immediately effective unless a federal court sets the order aside. At a time when there is a strong inclination for courts to defer to regulatory judgment, the court's skepticism of the agency's position is noteworthy.