The Consumer Financial Protection Bureau recently issued a rule capping the late fees that banks can impose on consumers at $8, but the rule could be overturned by a judge who reported owning up to $30,000 in Citigroup stocks. Judge Willett’s failure to recuse in this case is just the latest in a trend of judges deciding cases despite clear potential conflicts of interest — and it shows the urgency of passing stronger judicial ethics rules.

By bringing fees down to $8 from an average of $32, this new CFPB rule stands to save American consumers $10 billion. Most of these savings will flow directly into the pockets of Black, brown and low-income borrowers. But a consortium of banking industry trade associations — including the American Bankers Association, the Consumer Bankers Association and the Chamber of Commerce — immediately filed suit to block the regulation.

The case is in the hands of Fifth Circuit Court of Appeals Judge Don Willett, who reported owning up to $30,000 of stock in Citigroup, the nation’s fourth largest bank and third-largest credit card issuer. Citigroup itself alerted shareholders like Judge Willett that the rule would “reduce credit card fee revenues,” and an industry report indicated that Citigroup stands to lose more money than any other financial institution should the CFPB rule go into effect. 

After the CFPB raised concerns about Judge Willett’s participation in the case, he argued that there was no need to recuse as Citigroup wasn’t a named party to the case, and wasn’t listed on the boilerplate “Certificate of Interested Parties” form that the parties filed on appeal. Citigroup is, of course, a member of three of the trade associations bringing the case. While large credit card issuers were not included on the original Certificates of Interested Parties, they were included on a supplemental list that was filed at the district court level. 

Despite his Citigroup investment, Judge Willett has already issued a procedural ruling in this case and refused to recuse when asked, despite a lower court judge recusing over a similar conflict of interest. A panel of judges from the Judicial Conference looked into the matter and said the rules don’t “require” Judge Willett’s recusal from the case. The rules do not include any minimal asset value or de minimis exception to justify the panel’s decision. While the panel appears to have concluded that his participation in the case is not illegal, there is no explanation about why he should preside despite the financial conflict. 

Judge Willett’s refusal to recuse, and the lack of transparency about the rationale, reinforces the need for more judicial ethics reform to ensure that everyday Americans and government agencies have a level playing field when they go into court against corporate interests.

CREW has testified on multiple occasions about the crisis of institutional legitimacy engulfing the federal judiciary. We have repeatedly stressed that the judiciary’s entire structure is based on public confidence, and that even the appearance of a conflict of interest undermines the public’s trust. That bar is certainly met here, and Judge Willett should have recused in order to allow a judge to rule in the case who was free of potential conflicts and could issue a ruling that would not be clouded by legitimacy and ethics questions.  

This is far from the first time a judge has ruled in a case where they had financial conflicts of interest. In 2022, the Wall Street Journal found that federal judges failed to recuse themselves from 685 court cases between 2010 and 2018 despite having a financial conflict of interest. In another recent high profile case, Judge James Ho on the Fifth Circuit Court of Appeals ruled to restrict the abortion drug mifepristone, despite his wife accepting several thousand dollars in payments from the group behind the lawsuit.  

Situations like these are precisely why CREW has long advocated for enhancing judicial financial conflict of interest rules, including passing legislation like the Judicial Integrity Act, which would expand the federal criminal conflict of interest statute to the federal judiciary. As it stands, the burden practically rests on litigants, rather than judges, to enforce recusal rules — as Judge Willett’s comments and refusal to recuse demonstrate. 

This system clearly does not work, and will continue to further strain the public’s trust in our judiciary. Judicial ethics reforms can no longer be a proposed reform — the time for action is now.


Citigroup Centre photo by Matt Buck under a Creative Commons license.