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July 26, 2017

Better Markets Seeks to Disqualify Dept. of Justice in Landmark Case That Will Determine Fate of Critical Financial Reform

FOR IMMEDIATE RELEASE
Wednesday, July 26, 2017
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com

Washington, D.C. – Stephen Hall, Legal Director and Securities Specialist for Better Markets, released the following statement on the organization’s filing of a motion to disqualify the Department of Justice in the MetLife v. FSOC case:

“The Department of Justice has a profound and unmanageable conflict of interest as it struggles to serve two masters—the FSOC on the one hand and the President of the United States on the other.  That is why Better Markets filed a motion to disqualify the DOJ in MetLife v. FSOC.  A bedrock rule of law is that lawyers must zealously represent their clients’ interests, and to safeguard this principle, they are prohibited from representing different clients having conflicting interests.  That is exactly the case here, where the DOJ is representing multiple clients with conflicting interests on the same legal issue at the same time. The necessary remedy in these extraordinary circumstances is for the DOJ to be disqualified from representing FSOC.

“DOJ’s client, FSOC, is fighting in the D.C. Circuit to preserve its critical authority over financial institutions that threaten the stability of our financial system.  Yet at the same time, DOJ’s other clients, the President and the Secretary of the Treasury, are attempting to limit if not destroy that authority and derail the appeal.  The rules of ethics, which are applicable to government and non-government lawyers alike, prohibit such conflicts and call for disqualification of counsel where necessary to resolve them.t  

“To bring these vital issues to the Court’s attention, Better Markets has sought the Court’s permission to file an amicus brief detailing the DOJ’s conflicts of interest, calling for disqualification of the DOJ as counsel for FSOC, asking for appointment of independent counsel, and urging the Court to reject calls for any further delays in the case—a case that that was fully briefed and argued last year. In fact, this appeal would likely have been decided by now but for the eleventh-hour intervention of the President and Secretary of the Treasury, whose activities are aligned with FSOC’s legal adversary, MetLife.  

“The specific evidence of conflict in this case is compelling.  After full briefing and oral argument, and as the case was poised for a decision, MetLife suddenly filed a motion to delay the appeal for at least half a year.  It relied directly and expressly on a memo from President Trump, issued just two days earlier, that mandated a review of the FSOC’s designation process.  The President’s memo strikingly tracks the same issues presented by MetLife in the appeal.  Furthermore, all indications are that the DOJ reviewed the memo and counseled the President on its form and content.  The DOJ’s allegiance to the President then undermined its duty to FSOC: Acting in its role as counsel for FSOC, the DOJ responded to MetLife’s extraordinary request for a minimum half-year delay by asking for 60 days to think it over.  Thus, rather than providing conflict-free advice and zealously representing FSOC by fighting against MetLife’s baseless eleventh-hour bid to delay the case, the DOJ, purporting to act on behalf of and solely in the best interests of FSOC, instead agreed to one-third of MetLife’s request.  Confirming this conflict, the DOJ, again purporting to act solely in the best interests of FSOC in the case, recently sought 30 more days to further consider MetLife’s motion, thereby handing MetLife half the relief it originally sought. 

“There is absolutely no legal, logical, or policy-based reason for any delay in the appeal, and the review mandated by the President and undertaken by the Secretary of the Treasury certainly provides none.  The FSOC is entitled to be represented by counsel that will solely and zealously pursue its best legal interests and fight for an expeditious resolution of the case.    The DOJ simply cannot serve multiple clients with conflicting positions and goals on the same legal issue, particularly when the prejudicial effect on one client—FSOC—is so clear and so harmful. FSOC deserves independent, conflict-free legal advice and the Court should grant our motion, accept our brief, and issue the relief sought.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

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