Q 1: The Federal Home Loan Bank Board (FHLBB) operated the Federal Savings and Loan Insurance Corporation (FSLIC).The FHLBB’s duties included examining all FSLIC-insured institutions to determine whether they were being operated properly under applicable laws and regulations. As part of an investigation of Texas-based Vision Banc Savings and Loan, the FHLBB became suspicious of a large loan made to Sandsend Financial Consultants, Ltd. Hoping to trace the proceeds of the loan, the FHLBB subpoenaed Sandsend’s financial records from a second bank, West Belt. Sandsend requested a federal district court to void the subpoena. Should the court grant this request? Explain fully.
Q2: Sears, Roebuck & Co. adopted a new advertising program to boost sales of its Lady Kenmore dishwashers. The new ads claimed that these dishwashers “completely eliminated” the need for rinsing dishes before placing them in the dishwasher. The owner’s manuals accompanying the machines, however, recommended pre-rinsing. Interviews with consumers indicated that pre-rinsing was still required for truly clean dishes. In an action against Sears, the Federal Trade Commission (FTC) held that the advertising was misleading. The FTC’s remedial order required that Sears keep records to support all future advertising claims for all “major home appliances” and submit them to the FTC. Sears conceded that its dishwasher advertising was misleading but argued that the remedial order, which covered other appliances as well as Lady Kenmore dishwashers, was overly broad and unfair. Discuss fully whether the FTC’s broad order is legal.
Sears started a new ad program to increase sales of its dishwashers. The ads claim the dishwashers “completely eliminate” the need to rinse dishes. The manuals recommend pre-rinsing. Research showed the dishes also had to be pre-rinsed. The FTC held that the ad was false advertising and required Sears to keep records of all future advertising claims. Sears complained the action was unfair because it was enacted on other appliances. Was it unfair and overly broad?