Mount Holly Historic District

The Underbelly Of The Mt. Holly Settlement

The settlement of the Mt. Holly disparate impact case before it could be decided by the US Supreme Court was suspicious. At the time, it was thought by many that the US Justice Department had helped to engineer that settlement so that its (and HUD’s and the CFPB’s) use of that questionable doctrine in fair lending claims could continue for a while longer. The last thing the Feds wanted to be was for the SCOTUS to decide the matter because they were worried (correctly) that it would strike down its use. At the same time, the banking industry wanted the SCOTUS to render a decision because it thought that the court was more likely than not to strike down the doctrine’s use in the fair lending context. The last thing that banks wanted was for the parties to the case to settle before the SCOTUS could render its decision (which is exactly what happened).

Recently, a rock has been overturned that has exposed a bunch of creepy-crawlers that work not for the federal government, but for the big banks that wanted the SCOTUS to rule in the Mt. Holly case. According to a former senior executive of Chase, that bank tried to get him to use his board position with a non-profit housing organization to “scuttle” the funding of the settlement. Moreover, the former executive, Wayne Trotman, at the time the mid-Atlantic market president of Chase, alleges that when he refused to breach his fiduciary duty as a member of the board of directors, the bank retaliated by firing him.

The fact that Mr. Trotman is an African-American adds not only to the radioactivity of the alleged wrongful conduct but also a substantial irony to those actions, if Mr. Trotman’s allegations are true. While Chase counters that Trotman’s claims are “baseless,” Trotman’s lawyers claim that they have “substantial evidence” to support them.

Obviously, the first thing that Trotman has to prove is that Chase pressured him to use his board position to scuttle the settlement. According to the linked article, which cites Trotman’s Complaint, he claims that he was instructed to do so by Chase’s Associate General Counsel, via email, even after he refused on the grounds that it would breach his fiduciary duty. The Complaint later states that another Chase attorney told him that he should not honor the request (which was also the position of his supervisor). Apparently, the ball started rolling in Jamie Dimon’s office after he (and the heads of other large banks) received an email from Tim Pawlenty of the Financial Services Roundtable urging the bankers to find ways to derail the settlement long enough for the SCOTUS to render a decision. There does not appear from the kinked article to be any order from Dimon that Trotman does anything, but, then, that’s what subordinates are for: read the CEO’s mind and “get ‘er done” while retaining deniability for those residing at the top of Mt. Olympus.

The harder nut to crack for Mr. Trotman may likely be proving the causal connection between his decision to be an honorable man and not to breach his fiduciary duties, and his subsequent termination by Chase. It’s impossible to determine that connection solely from the linked article, although I assume that the “substantial evidence” referenced by Trotman’s lawyers indicates that they think that they can carry the water on that claim. The man worked for Chase for 19 years, received a “meets expectations” review shortly after the incident (although Chase substantially cut his bonus from the previous year, in which he received the same rating), then six months later received a mid-year performance rating of “poor” and was fired 14 days later without being provided an opportunity to improve. On its face, it looks like there might be fire with this smoke.

On the other hand, we haven’t seen Chase’s formal responsive pleading. In one press report, a Chase spokesperson told a reporter that Trotman ‘s position was eliminated in a “reorganization of markets.” That spokesperson also claimed that Chase would “fight this in court.” I guess that beats fighting it in the streets.

Obviously, it’s too early to tell what the outcome of this lawsuit might be. The smart money in these situations is on a cash settlement with nondisparagement and confidentiality provisions in the settlement agreement so that the “reputational risk” is mitigated and the whole sordid affair is swept under a rug.

Still. When it comes to picking a champion inducer of the gag reflex, it’s often tough to choose between Big Banking and Big Government.

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