Builders Bank v. Federal Deposit Insurance Corporation
United States Court of Appeals for the Seventh Circuit
846 F.3d 272 (2017)
- Written by Tanya Munson, JD
Facts
Builders Bank (plaintiff) was a state bank insured by the Federal Deposit Insurance Corporation (FDIC) (defendant). The FDIC conducted an examination of state banks every 12 to 18 months and assigned the bank a rating under the Uniform Financial Institutions Rating System (system) from one to five, with one being the highest. The rating was called a CAMELS rating after the system’s components of capital, asset quality, management, earnings, liquidity, and sensitivity. CAMELS ratings affected how much a bank must pay for deposit insurance. Builders Bank was given a CAMELS rating of four. Builders Bank brought suit in district court under the Administrative Procedures Act, arguing that its rating should have been three and that the lower rating was arbitrary and capricious. The FDIC argued that the CAMELS rating was unreviewable because it had the discretion to set appropriate levels of capital. Builders Bank insisted it took the FDIC’s capital requirements as given and only sought to challenge the application of the other five CAMELS factors. The district court ruled that the assignment of ratings is committed to agency discretion. The district court dismissed the suit for lack of jurisdiction under U.S.C. § 701(a)(2), which prevented a review of matters committed to agency discretion by law.
Rule of Law
Issue
Holding and Reasoning (Easterbrook, J.)
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