Judicial Panel Upholds U.S. Judge’s Role in Credit Card Fee Case

A recent decision by a judicial ethics panel has determined that U.S. Circuit Judge Don Willett, despite his son’s ownership of Citigroup stock, is not required to recuse himself from presiding over a lawsuit challenging a rule that caps credit card late fees at $8. The advisory opinion, released by the panel, addresses concerns raised by the Consumer Financial Protection Bureau (CFPB) regarding Judge Willett’s potential conflict of interest.

The controversy arose after Willett authored a 2-1 opinion questioning the transfer of the case from Fort Worth, Texas, to Washington, D.C. Politico had previously highlighted Willett’s connection to Citigroup, a major player in the credit card industry and a party challenging the CFPB rule.

In response, Willett clarified that the stock holdings in question amounted to a modest $2,000 in his son’s Coverdell education savings account. Despite the CFPB’s argument that Willett’s impartiality might be compromised due to his son’s ownership of Citigroup stock, the panel concluded that any potential impact on the stock was indirect and contingent, thus not necessitating recusal.

This decision maintains Willett’s position on the three-judge panel set to hear a related request by industry groups seeking to block the CFPB rule. Had Willett recused himself, it would have altered the composition of the panel and potentially influenced the outcome of the case.

The dispute centers on a CFPB rule aimed at curbing what the agency perceives as excessive fees charged by credit card issuers for late payments, estimated to cost consumers billions annually. The rule limits late fees to $8 for credit card issuers with over 1 million accounts, unless they can justify higher fees to cover their expenses.

While the CFPB and industry groups continue to spar over the legality of the rule, the judiciary’s decision ensures that Judge Willett will play a pivotal role in adjudicating this high-stakes case.

Neither the CFPB nor the Chamber of Commerce, a prominent challenger of the rule, have issued immediate responses to the panel’s decision. As the legal battle unfolds, the outcome will have significant implications for both consumers and the financial industry alike.

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