Being in a bad mood means having an unpredictable, sudden, and inexplicable change in attitude or behavior. In November 2011, the Office of the Comptroller of the Currency (OCC) filed a notice of its intention to impose a civil fine of $100,000 (“CMP”) on former T Bank CEO Patrick Adams. The OCC`s “beef” with Adams was that T Bank had engaged in many “uncertain and unhealthy” practices focused on payment processing services offered to commercial bank customers who created remote cheques. After a very careful review of the minutes (including a 155-page report), a federal administrative judge ruled that T-Bank/Adams had not acted in a dangerous and unhealthy manner, and that the CMP had not been found to be arbitrary and capricious. Key factors appear to be that the regulator was aware of the bank`s activities and had approved it, at least informally, during several multi-year reviews. Until you suddenly decide not to approve it anymore. The “paper path” supported Adams because it reflected many previous interactions with the regulator on payment processing service details, risk mitigation factors associated with the bank, and OCC`s policy advice. Adams also had a paper trail that clearly reflected full disclosure, cooperation and compliance with the regulator`s “requests.” Note that Adams never had to go to federal district court – he won at the administrative law level – which is highly unusual. lack of rational connection between the facts established and the decision taken.

Natural resources. v. U.S., 966 F.2d 1292, 97, (9th Cir.`92). A manifest error of assessment; an act that is not based on the consideration of relevant factors and is therefore arbitrary, capricious, abusive of power or otherwise inconsistent with the law, or if it was done without due process prescribed by law. 5 USC. 706(2)(A) (1988). Arbitrariness and capricious nature are standards of judicial review and appeal often found in administrative law. Under this standard, a lower court`s finding is not changed unless it has no reasonable basis or the judge has made a decision without reasonable cause or consideration of the circumstances. In summary, the challenger must prove that the regulator`s action is invalid because it was “arbitrary and capricious.” What does that mean? Black`s Law Dictionary defines “arbitrary and capricious” as “an intentional and unreasonable action without regard or disregard for facts or laws.” Admittedly, this is a heavy burden for the challenger. Let`s look at a few examples. UWB was placed under trusteeship by the Office of Thrift Supervision (OTS) in January 2011, and the bank`s former directors challenged the action. After a series of legal errors by the former directors, the case was finally decided in March 2013.

The U.S. District Court (DC Circuit) noted that the OTS had raised concerns about UWB`s “ongoing and significant” financial situation for more than a year prior to retention. A record of non-compliance with the OTS`s concerns precluded any conclusion that the conservatory was arbitrary and capricious. In July 2020, the Supreme Court upheld regulations issued by the Department of Health and Human Services (HHS) that allowed for-profit groups to deviate from the contraceptive mandate of the Affordable Care Act. The court ruled that the new HHS rules were legally implemented and that all relevant legal powers had been taken into account. Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, 140 pp. Ct. 2367, 2384 (2020) (“If departments did not pay attention to the requirements of the RFRA when formulating their solution, or discuss the RFRA at all, they would certainly be vulnerable to allegations that the rules were arbitrary and capricious.”). In the legal context, capricious character is defined in Boothe v. Roofing Supply, Inc.

de Monroe: “Arbitrary and capricious behavior is an intentional and inappropriate action without regard or consideration of the facts and circumstances.” These concepts are nuanced and difficult to understand. The Nevada Supreme Court announced that “if an agency`s decision is challenged as arbitrary and capricious, that court will uphold the decision if it is supported by evidence that reasonable sense could accept as appropriate.” Desert Palace, Inc. v Nevada Gaming Comm`n, 130 Nev. 1170 (2014) (based on United Exposition Serv. Co. v. State Indus. Ins. Sys., 109 Nev. 421, 423–24, 851 P.2d 423, 424–25 (1993)).

Conversely, an act of agency is arbitrary or capricious if the decision is “unfounded” or “despotic” and “a sudden change of mind without apparent reason”; A whim, a mere fantasy. City of Reno v. Wells Estate, 110 Nev. 1218, 1222, 885 P.2d 545, 548 (1994) (internal and citations omitted). Therefore, in Nevada, the test of substantial proof is inherently part of the arbitrary or capricious standard. The federal courts have listed that under the PPA, we regularly receive calls from customers about various actions taken by their regulators and are asked what legal rights the financial institution (“FI”) may have to challenge these actions. In 2002, the FSB launched an “investment leverage strategy” that finances long-term investments through short-term borrowing. During its regular reviews, the FDIC repeatedly warned of specific risk factors that needed to be mitigated. In 2008, after the FSB repeatedly failed to adequately address regulators` concerns, the FDIC issued a cease and desist order regarding the bank`s investment strategy. The FSB appealed and the case eventually ended up in the U.S. District Court in Oklahoma in December 2012. Since the FDIC had repeatedly warned and documented the bank`s capital shortfall, interest rate risk management, and liquidity shortfall, it was determined that its actions in issuing an injunction were not arbitrary and capricious.

In April 2011, the NCUA placed VFCU under guardianship, mainly due to its involvement in online gaming companies (which the NCUA had previously challenged), conflicts of interest, and membership violations, to name just the big things.