Otero Savings & Loan Association v. Board of Governors of the Federal Reserve System
United States District Court for the District of Colorado
497 F. Supp. 370 (1980)
- Written by Robert Cane, JD
Facts
Under the National Bank Act, banks could not pay interest on checking accounts. Otero Savings & Loan Association (Otero) (plaintiff) had a program that authorized Otero to automatically transfer funds from its customers’ interest-bearing savings accounts to cover the payments of checks issued by its customers. Otero customers’ checks were cleared through the federal reserve clearinghouse system. The Board of Governors of the Federal Reserve System (the board) (defendant) proposed to take an action that would result in the board refusing to accept or process Otero customers’ checks through its clearinghouse system. Such an action would interrupt the banking services for thousands of Otero customers and harm Otero’s reputation and goodwill. Otero sued the board, seeking a preliminary injunction to enjoin the board from excluding Otero from its clearinghouse system.
Rule of Law
Issue
Holding and Reasoning (Kane, J.)
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