*1 COMMISSIONER, OFFICE WATTERS, MICHIGAN SERVICES AND INSURANCE OF FINANCIAL BANK, A., et N. WACHOVIA al. 17, 2007 Argued April November No. 05-1342. 2006 Decided *4 J., Court, Ginsburg, opinion delivered the in which Kennedy, Alito, JJ., J., Souter, Breyer, joined. and a dissenting Stevens, filed opinion, Roberts, post, p. which C. X, Scalia, X, joined, and 22. X, part took no in the consideration Thomas, decision of the case. Blanchard, Assistant E. John of Michi- General Attorney With him on the briefs for the cause petitioner. gan, argued Thomas Cox, A. Michael and General, former Attorney were Casey, Solicitor General. L. Long A.
Robert for With the cause respondents. argued Noreika, Stock, Keith A. brief were Stuart C. him on the McAllister, J. Emily Henn, and William Lori Johnson Perrone.
Sri Srinivasan argued the United cause for States amicus curiae urging the brief With him on affirmance. Attorney Gen Clement, General Assistant were Solicitor PLungar, L. Deputy Julie Keisler, General eral Solicitor Douglas Stipano, Sneed, Williams, P. Horace G. Daniel * B. Jordan of *Briefs of amici curiae reversal were filed the State New urging York, Cait- Attorney New Spitzer, Eliot former General of York et al. Aronowitz, Deputy Solicitor General, Halligan, J. Michelle lin Solicitor General, by Kathryn Anne Sheingold, General, Assistant Solicitor Jersey, by the At- Milgram, Attorney General of New Acting former juris- Attorneys respective for their torneys and former General General Alaska, Troy Márquez W. Alabama, of King David follows: of dictions as Lockyer Beebe Arizona, Cali- Terry Goddard of Mike Bill Arkansas, of of Connecticut, Richard Blumenthal fornia, Colorado, of John Suthers of Delaware, Danberg Spagnoletti Robert J. of the District of Co- Carl C. of Jr., Crist, E. Florida, J. Thurbert Baker lumbia, Georgia, of of Charles Madigan Idaho, G. Lisa Hawaii, Mark J. Bennett of Lawrence Wasden of Iowa, Miller of Phill Kline Indiana, of Carter of Thomas Illinois, of Steve Foti, Jr., Louisiana, G. C. Greg Stumbo of Charles Kansas, Kentucky, of Curran, Jr., Reilly of Joseph Tom Rowe J. Maine, Maryland, of Steven of of Jere- Jim Hood Massachusetts, Minnesota, Mississippi, Mike Hatch of of Jon Bru- Missouri, Montana, W. Mike McGrath (Jay) miah Nixon of Nevada, Kelly Ayotte of New ning George J. Chanos Nebraska, of A of Mexico, Roy Cooper of North A. of Hampshire, Patricia Madrid New W. A Ohio, Dakota, Jim Petro of Stenehjem of North Wayne Carolina, Oregon, Thomas W. Cor- Hardy Myers of Oklahoma, Drew Edmondson Rico, Pat- Jr., bett, J. Roberto Sánchez-Ramos Puerto Pennsylvania, Carolina, Larry of South Henry McMaster Island, Lynch rick Rhode Tennessee, Greg Abbott Dakota, Long Paul G. Summers of South *5 Ginsburg delivered the of the opinion Court. Justice activities of Business national banks controlled by seq., (NBA 1 et Act), National Act Bank U. S. C. and thereunder the Office regulations promulgated by of (OCC). 371(a). §§24, 93a, Comptroller Currency As the agency charged by Congress supervision of NBA, OCC oversees of national operations and See NationsBank of their interactions with customers. Annuity N. C., N. A. Co., v. Variable Ins. U. S. Life 254, 256 exercises visitorial agency in- powers, audit cluding records, bank’s books and Mark L. Shurtlejf Texas, Utah, William H. Sorrell of Vermont, of Robert F McDonnell of Rob McKenna of Virginia, Darrell V. Mc- Washington, Jr., Graw, Virginia, Peggy Lautenschlager Wisconsin, of West A of and Patrick J. Crank Wyoming; of for Charles W. Tumbaugh, Commissioner of Financial Regulation Curran, Mr. Maryland for the et by State al. Sullivan, M. former Maryland, Steven Attorney General Solicitor Gen- eral, Gounaris, Jonathan Krasnoff, R. Thomas L. J. and Christopher Young, Fisher, General, Attorneys Assistant and Keith R. Special Assist- General; Quester; Attorney by ant AARP Amanda for al. et for the Center for State Enforcement Laws, Inc., and Antitrust Consumer Protection Houck; Thomas W.Merrill and Stephen D. by for the National Association Frederick, David C. by of Realtors Angstreich, Scott H. Ralph and W Holmen; and for the National by Conference State et al. Legislatures Wilmarth, Richard Ruda Arthur E. Jr. and amici curiae Briefs urging affirmance were filed for American Olson, Theodore B. Bankers Association et Perry, Mark A D. by al. John Hawke, Jr., Hutt, Howard N. Cayne, Nancy Perkins; Laurence J. L. and for the Chamber of Commerce of the United Alan by States America Untereiner, Conrad, Sarwal; Robin S. and Amar D. for Clearing Wiseman, Jr., House Giuffra, Michael M. by Association L.L.C. Robert J. Han, Waxman, Suhana Seth Q. P. Christopher Lipsett, R. R. Paul Wolfson, and A Luigs; David D. City by for Nager Glen National Bank Heifetz; and Beth Legal Foundation Michael E. England for the New Newhouse; Malamut Martin J. Jr., Pierce, for et Richard J. al. by Dellinger, Hacker, Schroeder, Walter D. Jonathan Christopher H. Ni- A Saharsky; cole Sam Kazman and Hans et Marcus Cole al. Bader. *6 entities, of other exclusion governmental
largely (2006). § 484(a); § 12 CFR 7.4000 federal. See or chartered banks The NBA authorizes specifically federally § 12 C. It also in U. S. 371. lending. real estate engage ... all that have exercise power “[t]o banks shall provides as be on the carry shall necessary such incidental powers §24 incidental Seventh. Among business banking.” conduct certain activities national banks may powers, author- subsidiaries,” discrete entities “operating through itself in activities the bank could under- solely ized engage same terms and conditions as those take, and to the subject 5.34(e) to the CFR bank. applicable 24a(g)(3)(A); bank, its Bank, Wachovia a national conducts Respondent real estate Wachovia business lending through Mortgage licensed owned, a state-chartered wholly Corporation, entity, is an It uncontested this subsidiary OCC. by operating business, suit Wachovia’s real estate if conducted by itself, national bank would be to OCC’s superintend- ence, to the exclusion of state registration requirements whether dispute visitoria! authority. question activities remain outside the gover- bank’s mortgage lending when those agencies nance of state licensing auditing or conducted, a division not by department In accord bank, but subsidiary. bank’s operating issue,1 have addressed the with the Courts Appeals business, con- hold that Wachovia’s whether mortgage we the bank’s ducted the bank itself through and not to is subject OCC’s superintendence, subsidiary, and visitorial the several regimes the licensing, reporting, in which the operates. subsidiary States Turnbaugh, (CA4 City Indiana National Bank of 463 F. 3d Bank, Burke, (CA2 2005); N.
2006);
Wachovia
431 F.
A. v.
I a Wachovia Bank is national association chartered Wachovia by OCC. Mortgage Caro Respondent North lina the business of corporation real estate engages in the State and elsewhere. lending Michigan Michigan’s banks, both national statutory regime exempts state, from state but mortgage lending regulation, mort requires brokers, lenders, and servicers that are gage subsidiaries of State’s Office of Financial register *7 (OFIS) and Services Insurance and submit to state supervi 445.1679(1)(a) §§445.1656(1), sion. Mich. Laws Ann. Comp. (West 493.53a(d) 1998).2 (West 2002), 493.52(1), and From 1997 until Wachovia was with registered Mortgage OFIS As a engage lending. Wa mortgage registrant, alia, inter chovia was an Mortgage required, pay annual fee, file an annual and its operating report, books and open records to inspection by OFIS examiners. §§445.1657, (West 445.1658, 2002), (13) (West 493.54, 493.56a(2), 445.1671 1998).
Petitioner Linda Watters, OFIS, commissioner ad- ministers the State’s laws. She exercises lending “general lenders, and over supervision control” has registered and au- thority to conduct examinations and and to investigations enforce requirements §§445.1661, against registrants. (West 445.1665, 2002), 493.58, 445.1666 493.56b, 493.59, (West 2005). 493.62a 1998 and has She also Supp. consumer and take enforcement investigate ac- complaints tion if she finds that a is not complaint “being adequately by the federal pursued appropriate authority.” regulatory (West §445.1663(2) 2002). 1, 2003,
On January Wachovia became a Mortgage wholly owned of Wachovia Bank. subsidiary Three
2Michigan’s law exempts subsidiaries national that maintain a main office or branch in Michigan. Comp. office Mich. Laws Ann. §§445.1652(1)(b) (West (West 445.1675(m) 493.53a(d) 2006), 2002), Supp. (West 1998). such Michigan. Bank has no Wachovia office Michi- later, advised State of Mortgage months Wachovia its it lending that was surrendering mortgage registra- gan of a it become an tion. Because had operating subsidiary maintained, bank, Wachovia Mortgage Michigan’s were requirements registration preempted. inspection Mort- Wachovia with letter responded advising Watters mort- no be authorized conduct that would longer gage activities in Michigan. lending gage suit Bank filed
Wachovia Wachovia against Mortgage commissioner, as in the in her Watters, official capacity the Western District of Court United States District relief injunctive They sought declaratory Michigan. registration Watters enforcing Michigan’s prohibiting and from interfer- Wachovia against Mortgage, prescriptions NBA and OCC’s exclusive visitorial ing authority. thereunder, vest they regulations urged, super- promulgated in OCC and application visory authority preempt Wachovia state-law controls issue. Mortgage Specifically, certain and Wachovia Bank challenged preempted pro- Brokers, visions of two statutes —the Michigan Mortgage *8 Act and the Lenders, Secondary and Services Licensing (1) The require Act. challenged provisions Loan Mortgage sub- national bank including mortgage lenders — banks themselves —to register but not national sidiaries conduct banking fees to the State before they may and pay the commissioner in and authorize Michigan, §§445.1652(1) (West or revoke Supp. deny registrations, 445.1656(l)(d) (West 2002), 445.1658, 2006), 445.1657(1), (West 493.52(1) 493.54, 493.53a(d), 445.1679(l)(a), 1998), (2) of an- 493.61; submission 493.55(4), 493.56a(2), and require and retention commissioner financial statements nual §§445.1657(2) format, a in documents particular certain (West (3) 493.56a(2) 1998); (West 445.1671, 2002), grant over and enforcement commissioner inspection (West (West Supp. 493.56b 2002), §§445.1661 registrants, 10 (4)
2005); authorize commissioner to take regulatory lenders, enforcement actions covered §§445.1665 against (West (West 2002), 445.1666, 493.58-59, 1998). and 493.62a
In Watters because that, Wachovia response, argued Mort- not was itself a national bank, the gage challenged Michigan controls were were applicable preempted. She also contended that the Tenth Amendment to the Constitution the United States exclusive superintendence OCC’s prohibits of national bank activities conducted lending through operat- subsidiaries. ing
The District Court granted
judgment
to the
summary
(WD
relevant
334 F.
2d 957, 966
part.
Mich.
Supp.
2004).
Chevron
framework
Invoking
two-step
U. A. Inc.
S.
v. Natural Resources
Council, Inc., Defense
(1984),
U. S. 837
court
deferred
Comptroller’s de-
termination that an
operating subsidiary
to the extent
regulation only
that the
bank would
parent
be
if it
the same
performed
2d,
functions.
334 F.
at 963-
Supp.
e.g.,
(2004)).
§§
5.34(e)(3),
CFR
(citing,
7.4006
court also
Watters’ Tenth Amendment
rejected
argument.
2d,
334 F.
at 965-966. The Sixth
Supp.
Circuit affirmed.
(2005).
II A Maryland, McCulloch Nearly years ago, Wheat. (1819), this Court held law federal over state supreme law with respect banking. Though issue McCulloch was short-lived, federal sys- Atherton v. FDIC, tem in the Civil War reemerged era. 519 U. S. 221-222 (1997); Hammond, B. Banks and Poli- ties in America: from to the Civil War Revolution *9 1864, In NBA, Congress enacted establishing system of national still in National today. Bank banking place Act,
11 Marquette Atherton, 222; S., 519 106, 99;3 13 Stat. U. ch. Corp., Minneapolis Bank v. First Omaha Service Nat. (1978). in The Act vested nation 299, 310, 314-315 S. 439 U. inci and “all such chartered banks enumerated powers
ally on as be the business carry shall necessary dental powers §24 To incon 12 S. Seventh. prevent U. C. banking.” na from or intrusive state regulation impairing sistent national bank shall “No system, provided: tional Congress authorized visitorial except any powers be §484(a). law Federal ....” enactment, since the NBA’s we have
In the years repeat control shields national made clear federal banking edly state regulation. from burdensome unduly duplicative g., Anderson, Nat. Bank v. See, e. U. S. Beneficial (2003) (national un system “possible protected Tiffany Bank v. National State friendly legislation” (quoting Mo., (1874))). chartered banks 409, 412 Federally 18 Wall. their to state laws daily are subject general application not conflict with the let business the extent such laws do of the NBA. Davis Elmira v. or the ter purposes general Savings Bank, Atherton, U. also 275, 290 govern laws S., usury at 223. For example, on banks can loans, rate of interest national charge maximum national banks “are §85, 12 U. S. C. contracts made by gov laws,” National Bank Com and construed State erned monwealth, “ac (1870), and national banks’ Wall. law,” based on State and transfer of property [are] quisition ibid. “the can no control over However, [na exercise States except wise affect their banks], nor operation, tional Any so far as see permit. thing may proper abuse, because it the usurpation power this an beyond and, Mechan- Farmers’ cannot which a give.” State single “An originally entitled 3,1864, 106,13 ch. Stat. was The Act of June by Congress its was altered Currency... title a National provide Act 343, 18 123. Ch. Stat. in 1874 to “the National Bank Act.” *10 12 Dearing,
ics’ Nat Bank (1875) (internal v. 34 91 S.U. omitted). marks quotation
We have of both enumerated in- “interpretjed] and grants cidental national banks not ‘powers’ grants limited rather normally ordinarily but con- by, pre-empting, Cty., Bank law.” Barnett Marion N. A. state trary Nelson, (1996). Franklin Nat 517 U. S. also See Square York, Bank Franklin v. New 347 U. 375- States permitted regulate of national banks where so does not doing prevent sig- interfere with the national or the nificantly bank’s national exercise of its But when regulator’s powers. state the exercise prescriptions significantly impair authority, enumerated or incidental NBA, under the the State’s regu- Bank, Barnett lations must S., 517 U. give way. 32-34 (federal law national banks to sell insurance permitting small towns state statute preempted prohibiting Bank, of insurance); Franklin Nat most selling types (local U. atS., 377-379 restrictions because preempted they burdened exercise of national banks’ incidental power advertise).
The NBA authorizes national banks to engage mortgage lending, subject OCC Act regulation. provides: make, national “Any association may arrange, or sell loans or purchase extensions of credit secured by 1828(o) liens on estate, interests real this title and such restrictions as the requirements Comptroller Currency may prescribe by regula- 371(a).4 tion or order.” C. U. S. §1828(o) 12 U. S. C. requires agencies Title federal banking adopt regulations
uniform prescribing lending by for real standards estate de institutions pository forth governing sets criteria such standards. e. g., See, 1828(o)(2)(A) (“In agencies standards ... prescribing shall (i) posed deposit risk to the insurance such funds exten consider — (ii) credit; sions of .operation deposi for safe and of insured need sound (iii) credit.”). institutions; tory availability law genuine dispute, may significantly Beyond exercise of real estate lend bank’s own its burden as it not curtail or hinder a national just may ing power, efficient exercise of other incidental or bank’s power, Bank, Barnett S., under the enumerated NBA. *11 33-34; Franklin, S., at 375-379. See also CFR at 34.4(a)(1) (2006) state controls on § preempted (identifying and In licensing registration). mortgage lending, including a national real estate when conducted by lending, particular, is immune from state visitorial control: The NBA bank, spe to vests exclusive examine and inspect cifically authority 484(a) (“No shall be 12 U. S. C. national bank subject OCC. visitorial as authorized Federal any except powers by law.”).5 at issue
Harmoniously, exempt Michigan provisions Mich. national banks from Laws Ann. coverage. Comp. (West 445.1675(a) 2002). a This is matter of simply post, and 17. n.
Michigan Legislature’s Cf. grace. For, as the the NBA would have preemp parties recognize, e., i. it would bank from force, tive a national state spare here Petitioner controls of the kind involved. See Brief for as Ami 14; Brief for Brief for United States 12; Respondents cus Curiae national banks’ 9. State laws that conditioned State, on with the and sub real estate lending registration such to the and enforce State’s lending investigative jected would interfere with the banks’ fed machinery ment surely authorized business: National banks would be erally subject im and enforcement regimes to registration, inspection, all which the but States by not just by Michigan, posed Diverse and banks operate.6 duplicative superintendence (2006) (“[OCC] §37.02, p. has Taylor, Banking also 2 R. Law 37-5 (footnote banks.” [national] to charter and examine exclusive omitted)). (2004) (“The multiple, often unpre Reg. application See 69 Fed. dictable, requirements prevents state local restrictions different Federal manner authorized under from banks] [national engagement banking, in the business of banks’ we century ago, precisely what the observed over NBA was designed prevent: “Th[e] legislation in view has the erec extending system country, throughout tion of a and inde pendent, powers concerned, so far conferred are permitted might legislation applicable, impose if be which, and as limitations and restrictions as various numerous as Iowa, States.” Easton v. 188 U. S. explained, intend, we did not “to leave the field open attempt promote for the States welfare and stability by legislation. [C]on- of national direct . . . necessarily possessed fusion would result control independent Id., two exercised authorities.” at 231-232. Recognizing duplication burdens undue state con- produce, Congress trols could in the NBA included an ex- press command: “No national bank shall be powers except visitorial as authorized Federal law ....” *12 484(a). § (ac- supra, 12 U. post, 11-12, S. C. 13; See at at 31 knowledging that “exemp[t] national banks have been authority state years”). visitorial for ... more than 140 explained superior “Visitation,” we have “is the act aof or superintending corporation officer, who a visits to examine conducting into business, its manner of and enforce an ob- regulations.” servance of its laws and v. Harkness, Guthrie (internal (1905) omitted). quotation 199 U. 148, S. marks 7.4000(a)(2) (2006) § (defining See also 12 CFR “visitorial” “(i) (ii) power [e]xamination [inspection as of a bank; of a (iii) [Regulation supervision bank’s books records; and and permitted pursuant activities authorized or to federal bank- (iv) ing any [e]nforcing compliance law; and applicable with activities”). federal or concerning state laws those Michi- gan, therefore, cannot confer its commissioner on examina- law, costly burdensome, ability and interferes with their to plan their risks, subjects business and manage their and to them uncertain liabilities potential exposure.”). over authority lending, tion and enforcement mortgage done national banks.7 by business other banking B licensing, that Michigan’s registration, While conceding to cannot national be applied and inspection requirements g., e. 10, 12, Watters banks, see, argues Brief Petitioner survives regime preemption that the State’s regulatory Because subsidiaries. banks’ national respect some are chartered under separately such subsidiaries as “affiliates” characterizes them law, simply State’s Watters even and contends that banks, though they national are also subject they OCC’s superintendence, Id., at 17-22. We multistate control. disagree. has the “incidental” authority
Since OCC recognized under to do through of national banks Seventh business 22-26,43. But system.” post, a See at banking “dual Ours indeed license, inspect, system permitted is a that has never States they repeatedly do state banks. supervise national dissent in First Nat. Bank equality” featured policy “competitive refers to the 25, 35, Dickinson, 122, 131 at post, City v. 396 U. in Plant however, context. words, ripped should not from their 43. Those be (Branch Banks), 1228, 12 44 Stat. Act City Plant involved McFadden banks to Congress expressly authorized national U. S. C. which when, where, and law would authorize “only branches how state establish S., at 130. operate [branches].” such 396 U. a state bank establish (“[W]hile id., has over See also absolute banks, incorporated has reference the limitations [McFadden Act] Con banks. state law on branch places which competitive deliberately upon policy intended foster has settled gress sys that neither concern congressional Act reflects the equality.... [The] *13 banking.” (quot other in the branch advantages over the use ha[s] tem Co., U. S. Logan v. Walker Bank & Trust 385 ing First Nat. Bank of (1966))). grant Congress expressly conditioned has “[W]here ordinarily found grant permission, the Court has of‘power’ upon N. A. v. applies.” Cty., Marion no such condition Barnett Bank that 25, 34 us, Nelson, before unlike the provisions 517 U. The NBA Act, power by national not condition the exercise McFadden do supra, at 13. by state banks. See of similar exercises on state allowance subsidiaries. 31 Fed. See Reg. 11459-11460 operating 5.34(e)(1) (“A (2006) (1966); § national bank CFR con- may duct in an that activities are operating subsidiary permissi- ble for a in national bank either directly engage part of, .”). or the business of to, incidental ... That uncontested by Michigan’s commissioner. (“[N]o Brief for Petitioner 21 one §24 disputes USC (Seventh) national authorizes banks to use nonbank operat- ....”). subsidiaries ing OCC licenses and oversees national subsidiaries as it does national operating just banks. (“An 5.34(e)(3) conducts activities au- operating subsidiary thorized under this section to the same authoriza- pursuant tion, and conditions terms to the conduct of apply such activities its bank.”);8 national United parent States Of- fice of the of the Comptroller Related Currency, Organiza- 2004) (hereinafter tions: Handbook 53 Comptroller’s (Aug. Handbook) Comptroller’s subsidiaries (“Operating sub- to the same ject as the supervision regulation parent bank, where otherwise or except law OCC provided by regulation.”).
In 1999, defined and “financial” regulated sub- sidiaries; those simultaneously, Congress distinguished na- tional bank affiliates from typed “operating subsidiaries — subsidiaries” by OCC—which activi- may engage only ties national banks to the may directly, engage “subject same terms conditions conduct such govern banks.” Act Gramm-Leach-Bliley (codified (GLBA), § 121(a)(2), 113 at 12 Stat. U. S. C. regulation provides: further “If, examination, upon OCC operating subsidiary determines that the law, condition, operating regulation, violation of or written or in an or unsound the safety unsafe manner or threatens or otherwise soundness bank, subsidiary the OCC will direct the bank take action, appropriate may requiring remedial the bank which include to di- or liquidate subsidiary, vest the operating specified or discontinue activi- 5.34(e)(3) (2006). ties.” CFR *14 na- treats For OCC 24a(g)(3)(A)).9 supervisory purposes, as eco- tional banks and their subsidiaries operating single over- Handbook 64. OCC nomic Comptroller’s enterprise. line,” both reference to “business by sees entities applying are conducted same whether “activities the controls an subsidiary.” or through operating directly Ibid.10 not of Watters does contest noted, authority As earlier subsidiaries. national to do business through operating to supervise regu- does she Nor OCC’s dispute as national in same manner late subsidiaries operating on Still, state regulation banks. Watters seeks impose and above undertaken subsidiaries over operating regulation examination, as supervi- OCC. But just duplicative sion, would burden significantly and regulation mortgage supra, banks, see at when in national lending engaged subsequently regulations its track statute. See OCC revised 5.34(e)(1), (3); Subsidiaries, 65 Operating <§ Fed. Financial Subsidiaries (dissent’s (2000). 12905, 29, 30 grudging C£ at acknowl Reg. post, na “may acquiesced” position that have OCC’s edgment may banking” through operating engage tional banks “the business do). empowered only what the bank itself can to do subsidiaries limits, statutory regulatory or example, purposes applying For “for §§56, restrictions,” g., 12 U. S. C. e. lending as limits dividend such subsidiaries are consoli 84, 371d, operations operating results “[t]he Likewise, 64. Comptroller’s Handbook parent.” with of its dated those subsidiary operating an accounting reporting purposes, and regulatory bank; assets and liabilities the two part the member treated 223.3(w) 5.34(e)(4)(i), §§ OCC 12 CFR entities combined. See may consoli differently. A financial subsidiaries national treats subsidiary with a financial those date the assets liabilities of maintained “that fairly It Comptroller’s Handbook 64. cannot be bank. holding ownership from Mortgage’s] [Wachovia the transfer 2003 of company’s changes in no relevant company the Bank” resulted becoming at n. 8. On supra, with Compare post, business. subsidiary, Mortgage became Wachovia Wachovia’s banks, including full super terms same and conditions as exposed company signifi change visory authority of This OCC. nondeposi as a state experienced cantly oversight than more federal institution. tory
11-15, so too would those state controls interfere *15 same when in an activity engaged by operating subsidiary.
We have never held that the of reach the NBA preemptive to Rather, extends a national bank in only itself. analyzing whether law state the federally hampers permitted activities of bank, a national we have on the focused exercise na of a powers, tional bank’s not on its See, structure. corporate g., Bank, e. Barnett S., 517 And we at 32. have treated as subsidiaries to national equivalent banks with operating exercised under law federal respect powers where (except C., otherwise). NationsBank N. federal law In provides of A.,N. S., 256-261, 513 U. at we example, upheld OCC’s determination that national banks had “incidental” authority to act the sale of It was not agents annuities. material that the function as within “the business of qualifying bank §24 Seventh, was to be ing,” carried out not the bank by i. an e., itself, but an by operating subsidiary, entity “subject to the same terms and conditions that the conduct of govern § national [themselves],” [the activity] by 24a(g)(3)(A); See also Clarke v. Securities In 5.34(e)(3) 12 § CFR dustry Assn., (1987) (national banks, 479 U. acting subsidiaries, have through to offer discount operating power services).11 brokerage interference
Security against significant by regula- tors characteristic condition the “business banking” conducted national by banks, is one mortgage lending e.g., of that See, §484(a); business. aspect U. SC. supra, post, 34.4(a)(1) (2006). CFR 11-15; See also at that, in 1982, (acknowledging authorized Congress broadly post, national banks to engage at 36- mortgage lending); 37, and n. subsidiaries “are operating (acknowledging to the same federal as their oversight national bank 11 Marquette Nat. v. First Cf. Minneapolis Bank Omaha Service (1978) Corp., 439 U. S. 299, 308, (holding n. 19 may national bank rate, charge home regardless State’s interest of more usury restrictive subsidiaries). State, laws but declining operating borrower’s to consider should adhere whether the busi- security That parents”). itself or is to an oper- is conducted the bank assigned ness licensed whose subsidiary carry OCC ating bank. with that on business coincides completely Boutris, 419 F. 3d Bank, N. A. v. Fargo See Wells (CA9 2005) (determination whether to conduct business subdivisions subsidiaries or through through operating one of internal “essentially organization”). if States contends that meant deny
Watters have subsidiaries, would visitorial over powers 484(a)’s only on state inspection written ban apply out banks but also their affiliates. She points which authorizes to examine “affiliates” §481, OCC *16 banks, does not to state visitorial powers. national speak First, two cannot as- This fails for reasons. one argument to the cribe intention subsidiaries operating regarding §§481 and or the Con- that enacted Congress on affiliates to that added provisions examining gress §481 §221a. That is so the definition of “affiliate” to until were not authorized because subsidiaries operating decades, four at 15-16. Over the past 1966. See supra, as im- which subsidiaries have emerged during operating banks, Congress instrumentalities national portant are “sub- no that such subsidiaries have indicated doubt OCC national to the terms and conditions” as same ject themselves.
Second, recog- Watters the distinctions ignores Congress term defines the NBA nized “affiliates.” among broadly a na- controlled by “affiliate” to include “any corporation” 221a(b). § 12 U. S. C. bank, See subsidiary. tional including one “affiliate.” type is therefore An subsidiary operating not author- in functions But unlike affiliates that engage may subsidiaries, NBA, an financial operating ized e.g., by by specification tied to its subsidiary tightly parent as au- in “the business banking” it only that may engage 5.34(e)(1) § § CFR the Act. 24a(g)(3)(A); thorized supra, (2006). 16-17, and n. 10. also when Notably, amended the NBA that confirming sub- operating sidiaries in may solely “engag[e] national banks are in directly,” C. permitted engage S.U. Act, GLBA, so an §24a(g)(3)(A), did providing affiliates, other authorized financial engage nonbanking g., e. activities, insurance, securities and g., See, e. in connection with regulation those activities. 1844(c)(4). §§ 1843(k), 6701(b) See also 15 S. C. U. (any per- son who sells insurance must obtain a state license do so).12
C Recognizing neeessary national banks’ consequence authority an engage mortgage lending operat- through to the same ing subsidiary “subject terms and conditions that govern conduct such activities national banks,” 12 S. C. §24 see also §24a(g)(3)(A), Seventh, OCC promul- (2006): gated CFR 7.4006 “Unless otherwise provided by Federal law or OCC laws State regulation, apply subsidiaries to the same extent those laws to the national bank.” See apply parent Investment Securities; Bank Activities and 66 Fed. Operations; Leasing, Reg. Watters disputes OCC to this that, promulgate regulation and contends be- *17 cause is a for preemption legal determination question by post, courts, § 7.4006 should attract no also deference. See at 38-43. This is beside the argument under our point, of the interpretation statute, the level of deference owed to the is an academic regulation Section question. 7.4006 12The protests dissent that the GLBA not preempt does itself the Michi gan provisions at post, issue. C£ at 36-38. We no express opinion on that matter. point Our is more GLBA simply modest: The demonstrates Congress’ recognition formal power that national banks have incidental to do business through 16-17; operating supra, post, subsidiaries. See at cf. at 30-31. conveys: what the NBA already clarifies confirms
merely lend- in real estate bank engage A national has power same to the subsidiary, an operating through ing itself; the national bank govern conditions that terms and or impeded by be cannot significantly impaired that power g., Bank, 33-34; 12 See, e. Barnett S., at 517 U. state law. 371.13 Seventh, §§24 24a(g)(3)(A), U. C. by protect read OCC
The NBA is thus properly in the “busi- a hindrance national bank’s state engagement the bank itself conducted ness of whether banking” the bank to do what only an operating subsidiary, empowered supra, 16-17. The to en- at authority itself could do. See from the in the comes business mortgage lending gage §371, business NBA, conduct does Seventh, §§24 See subsidiary. an through operating OCC, visitorial That Act vests 24a(g)(3)(A). oversight 484(a). (in case, this state State law regulators. law), North all governs incorporation-related Carolina agree, formation, dissolution, and internal such as the issues, gover- of the And the laws nance of subsidiaries.14 operating located or their affiliates are in which national banks States supra, the NBA does not address. See matters govern with the “busi- 11. state cannot interfere at But regulators banks or their banking” by ness subjecting audits subsidiaries multiple OCC-licensed operating rival surveillance under oversight regimes. regula independent NBA OCC’s we hold Because itself — Michigan laws to national pertinent preempts application
tion — subsidiaries, lengthy dissent’s we need not consider the authority in administra preemptive on the dangers vesting discourse 38-43; (maintaining post, at cf. post, tive agencies. agency’s says, an administrative this is a case about the Court “[w]hatever “endors[ing] ad laws,” accusing Court
power preempt state law rather preempt was to purpose ministrative action whose sole command”). implement statutory than compliance Mortgage is out assert that Wachovia does not Watters corporate governing its status. law North Carolina *18 III §7.4006 Watters’ alternative CFR vio argument, lates the Tenth Amendment Constitution, un is As we have availing. previously explained, “[i]f power Constitution, delegated Congress the Tenth Amendment disclaims expressly any reservation of that to the States, New York v. power States.” United S.U. 144, 156 of national bank ais Regulation operations under Commerce and prerogative Congress Necessary Clauses. See Bank v. Proper Inc., Citizens Alafabco, curiam). (2003) 539 U. S. The (per Tenth Amend ment, therefore, is not here. implicated
[*] [*] [*] stated, For the reasons of the Sixth Circuit judgment
Affirmed. Justice Thomas took no in the consideration or deci- part sion of this case.
Justice Stevens, with whom The Chief Justice Justice Scalia join, dissenting. has enacted no legislation immunizing subsidiaries compliance nondiscriminatory
state laws the business bro- regulating mortgage kers and lenders. Nor has an it authorized executive agency such state laws it pre-empt whenever concludes they interfere with national bank activities. Notwithstanding absence relevant statutory authority, Court today endorses an incorrect determination agency’s the laws aof State must sovereign yield federal power. sig- nificant of the Court’s decision on the impact federal-state balance and the dual makes system appropriate to set forth in full the reasons for dissent. my
I (or NBA), 99, authorized National Bank 13 Stat. Act banks, §5, id., 100, of national at the incorporation as be neces- “all incidental shall them such powers granted 8, id., on business of at banking,” the sary carry Seventh), (codified §24 subject regulatory at C. U. S. § 54, 13 Stat. Currency, the Comptroller oversight for state legislation maintain a role To meaningful 116. in core banking that did not engage
for state corporations activities, authority. national circumscribed mak- from banks were expressly prohibited national Notably, id., loans, Moreover, the shares at 108.1 ing mortgage were their real estate banks, holdings, national as well §41, id., 111; taxation, state subject nondiseriminatory state law money, capped national could lend and while banks id., 30,§ at 108. interest the rates could they charge, would banks “existing was Originally, anticipated the charters and under re-incorporate surrender their state That national the law with charters.”2 terms of new Bank Instead, after an initial post-National did not happen. thrived.3 What decline, state-chartered institutions Act banks mix of state and national was the emerged competitive banking system. known as dual fed- because recognized
This has consistently Court must interstitial, comply national banks eral law generally and the between the state difference “There is no more characteristic exception, state without than fact that almost laws prohibited security, national banks are may real while banks loan on estate Barnett, doing Banking in the United States Since from so.” G. State 1983) (hereinafter (1902) (reprint Bank Act Passage of the National Barnett). from the Revolution in America: Hammond, and Politics 2 B. Banks Civil War Id,., than 800 (estimating that more Barnett 73-74 at 733. See also noting “remarkable increase 1877, and operation in banks were the 19th two decades of the last during banks” number of state in the century). same rules
with most of the as their state As counterparts. that has we articulated the remained early principle the lodestar our that national jurisprudence: “are so State as that exempted far only legislation, with, interfere their may legislation impair efficiency which are functions by they performing designed serve that . . . government. They State, laws and are in their course governed daily *20 of the of business far more laws the State than of the nation. All their contracts are and construed governed laws. Their by State and transfer acquisition of prop- debts, their collect their erty, and their right liability is debts, It be sued for are all based on State law. only incapacitates the when State law the banks from discharging government their duties the that it be- comes unconstitutional .” National Bank v. Common- wealth, (1870) 353, added).4 9 Wall. 362 (emphasis Until we today, have remained faithful to the that principle laws of nondiscriminatory general that do not application “forbid” or “impair national bank significantly” g., e. Barnett Bank Mar- should be See, pre-empted. Cty., ion N. A. Nelson, (1996).5 25, v. 517 U. S. 33 McClellan v. Chipman, 164 U. S. (1896) See also 347, (explaining that our cases establish “a rule exception, being and an the rule the opera tion of general upon dealings state laws the and contracts of national banks, exception the being operation the cessation of the of such laws they whenever expressly conflict with the laws of United the States frustrate the purpose created, for which the national were or impair efficiency their to discharge imposed the duties upon them the law of States”). the United Luckett, also Anderson Nat. Bank (1944) 233, v. S. (“This Court pointed has often out that national banks are state laws, unless those infringe banking laws impose the national laws or an Davis v. El undue burden performance functions”); on the of the banks’ Bank, Savings mira (1896) 275, 161 U. course, S. in (“Nothing, this opinion deny operation intended to of general and undiscriminating state laws on the banks, contracts of long so as such laws do not recognizing the vital role alone in Nor is Court banking system. Al legislation plays in the dual state system’s banking its diver main virtue is though the dual 6 Congress has banks, gent treatment national and usually govern recognized consistently state law must state banks for dual both national and activities of early effectively. system operate as As congres Court that this observed Brandéis Justice string long statutes: recognition is in embodied sional adopted in policy equalization the National was “The applied, in since been Bank Act of and has ever concerning provision In amendments to taxation. in Reserve Act and amend- Act and the Federal provisions policy expressed in con- ments thereto the conferring power ferring branches; those establish concerning fiduciary; interest power in those to act capitalization. concerning deposits; It in those on securing appears been of influence also to have some mortgage.” grant power to loan on 1913 of Fidelity Deposit Md., 292 U. Co. Lewis & *21 (footnotes, statutes, relevant with 564-565 citations omitted).7 in Bank in reasons, we First Nat.
For the same observed (1969), “[t]he City 122,133 Dickinson, 396 U. S. Plant firmly competitive policy equality . embedded the of .. firmly system.” governing the So national statutes congressional policy competi- of embedded, fact, that “the purposes Congres- of general objects and the letter or the conflict with legislation”). sional in Regu Competition of Scott, System: A Model Banking The Dual (1978) benefits perceived lation, (explaining Rev. 30 Stan. L. 8-13 banking system). dual Co., Bank & Trust Logan v. Walker First Nat. Bank See also Act, (1966) “Con McFadden passing (observing S.U. adopted in the National first continuing equalization its policy was gress 1864”). Bank Act equality tive with its to state deference standards” “open Comptroller Currency.” to modification of the Id., at 138.
II Although banking system dual has intact, remained Congress radically system has transformed national bank brought from its considerably Civil War antecedent and more federal to bear on state-chartered institutions. changes despite Congress Yet all the has made to na- system, despite tional bank power its exercise of federal pre-empted over banks, never has state laws like those at issue in this case. significantly,
Most in 1913 established the Fed- System monetary eral policy Reserve to oversee federal through availability its influence over credit. Federal §§ required 2, 9, Reserve Act 252,259. Stat. The Act na- permitted tional banks and state banks to become Federal subjected Reserve member banks, and all member banks to regulations oversight. Federal Reserve Ibid. Also of signal importance, banking system collapsed during after the Depression, Congress required the Great all member banks deposit newly to obtain insurance from the established Fed- Deposit Corporation. eral (or Banking Insurance Act of 1933 Act), Glass-Steagall Banking §8,48 168; Stat. see also Act Although steps 49 Stat. 684. both of these meant many subjected significant state banks were federal regulation,8 banking system along “the state continued banking system, attempt the with no to exercise preemptive regulatory authority federal over the existing Banking Malloy, state banks.” M. and Finan- (2d 2005). cial Services Law ed.
8What has emerged are “two interrelated in which systems most state- chartered banks are varying degrees to regulation, federal and where state extent, laws are made to applicable, to a varying federally- Graham, 1.04, (Nov. chartered § institutions.” p. A. 1-12 Banking Law 2006). has overhauls, over In addition to these systemic Congress of national The changes time modified banks. powers detail, in but two are too various to recount particular are re- First, case. has gradually this Congress importance national banks. by laxed on its prohibition mortgage lending to make loans In national banks 1913, permitted Congress 273, §Act, 24,38 Stat. land, Federal Reserve secured farm their was in years, mortgage lending power and succeeding in the of the vicinity loans on real estate cover enlarged loans bank, 7, 1916, §24, 754, Stat. and “se- Act Sept. cured first liens forest tracts which upon properly 15, 1953, 510, 67 in all Act of ch. respects,” Aug. managed national banks’ Stat. substantially expanded 614. Congress 1974, make real estate see loans Housing power Act, VII, Title Stat. Community Development at 12 it enacted the broad now codified language, to make 371(a), national banks “loans U. S. C. authorizing . in real estate.” Garn-St . . liens on interests secured by IV, §403, Title Institutions Act of Germain Depository have enabled national 1510. While these changes 96 Stat. with state in more evenhanded competition engage banks, them any reflect no they purpose give certainly competitive advantage.9 both curtailed and
Second, has over the years affiliate with other of national banks to ability expanded century, In of the banks routinely the early companies. part and affiliated compa- in investment activities engaged Act an end did same. The Glass-Steagall put nies that in 1933 bank depositors to that. to protect “[E]naeted that occurred of the widespread closings any repetition support that the Court cites noteworthy principal It is that the cases Michigan laws pre-empts itself conclusion that federal statute its engage banks to years before Congress decided authorized were of the Comptroller lending years before Office mortgage ante, (OCC) operating subsidiaries. their authorized use Currency 11-12,14. *23 28 Governors, Board FRS the Great v.
during Depression,” of Company Institute, Investment (1981), U. S. Federal Reserve member Glass-Steagall prohibited banks (both national) from state and affiliating investment banks.10 In the affiliates had view, Congress’ engaged activities in turn contributed speculative commercial banks’ failures. It was this focus the on Depression-era welfare of to stockholders —that depositors opposed pro —as vided for the basis action legislative designed to ensure bank solvency.
A later, scant two forbade national years the of shares a any because of similar owning company fear that such could undermine ownership safety soundness national banks:12 as hereinafter “Except pro- vided or law, otherwise herein con- permitted nothing tained shall authorize national purchase by [a bank] any its own account of of stock shares corporation.” added). Act of 308(b), 49 Stat. 709 Banking (emphasis That remains on the books provision See 12 U. S. C. today. §24 Seventh.
These restrictions did not forbid all affilia- congressional tions, however, and national banks began experimenting with new forms. One of corporate those forms involved the national bank In ownership “operating subsidiaries.” 1966, the of the took the Comptroller “that Currency position
10In
Investment Company
Camp,
Institute (1971),
While porate structures,13 endorsed the it neither disavowed nor ownership op- position Comptroller’s on national bank Notwithstanding congressional erating subsidiaries. again attempted expand to silence, in 1996 the OCC once powers. agency ownership The issued a national banks’ operating regulation permitting bank subsidiaries national en- allowed to bank was not to activities that the undertake (1997) (f) 5.34(d), §§ (authorizing directly. gage in 12 CFR “acquire an subsid- national to or establish permissible iary engage [activities] from that to in different long parent bank,” as those activities so banking, deter- "part to the business incidental Currency”); Comptroller 61 Fed. by see also mined Reg. regulation in in the this overruled OCC (GLBA),
Gramm-Leach-Bliley The 1338. Act Stat. banking legislation piece inasmuch was a seminal GLBA Glass-Steagall be- repealed on affiliations Act’s ban as it id., at 101, banks. See commercial and investment tween however, the GLBA ad- case, this 1341. More relevant to subsidiary cor- powers owm of national banks dressed the provided subsid- porations. national bank Act The 133; Holding Bank 70 Stat. Holding Company Act of See Bank Stat. 1760. Company Act Amendments of
iary engaging parent in activities forbidden subsidiary,” be would considered §121, “financial id., subjected heightened regulatory and would be obli- 371c-l(a)(l). gations, e.g., see, 12 U. C. GLBA’s definition “financial excluded subsidiaries” those subsidiar- solely “engag[e] ies that that national banks are permitted engage directly and are conducted govern the same terms and conditions that the conduct of §24a(g)(3). such activities national banks.” By implication, negative only engaging then, subsidiaries purely national bank activities—which the OCC had “operating subsidiaries,” termed but which the GLBA never subjected being mentions name—could avoid to the re- applied Compare financial strictions subsidiaries. §371c(b)(2) (exempting regulatory subsidiaries from certain restrictions) §371e(e) (clarifying that financial subsidi- *25 “subsidiaries”). not aries are to be treated as Taken to- gether, rejection provisions po- these worked a of the OCC’s subsidiary engage sition that an could engage directly.14 that national banks could not §24a(g)(3). Apart implicit rejection from this of the OCC’s regulation, 1996 however, the GLBA not even does mention operating subsidiaries. Congress
In sum, itself has never authorized national incorporated use banks to subsidiaries under state law to perform traditional functions. Nor has it author- any entity ized the to OCC “license” do state-chartered to so. may acquiesced expansive The fact that it have in the OCC’s 14 statutory While provides ample conclusion, support text for this noteworthy it is that it by contemporary was so understood commentators. g., See, (1999) e. 145 Cong. (“Recently, Comptroller Rec. 29681 of the (Seventh) Currency has interpreted 24 section National Bank Act permit engaged banks to own and control subsidiaries in activi ties that directly. national banks cannot conduct These and decisions legal reasoning contrary therein are the law. erroneous The (statement [GLBA] ...” Representative overturns these decisions Bliley)). its basis plainly insufficient interpretation finding pre-emption. for
Ill Congress It is familiar that learning purpose “[t]he Cipol- touchstone of analysis.” the ultimate pre-emption Liggett Group, Inc., (1992) (internal lone v. 505 U. S. omitted). In divining marks that quotation congressional that would hew both I would have the Court purpose, hoped federal rule, text to the central our the NBA’s basic ... we ‘start with that all cases system, pre-emption “[i]n that of the States the historic assumption powers police were not to be the Federal Act unless superseded by Med- was the clear manifest of Congress.’” purpose tronic, Lohr, Rice v. (1996) Inc. 518 U. S. (quoting Corp., (1947)). Santa Fe Elevator it Had so, done have avoided the untenable conclusion could the state laws meant the NBA to pre-empt Congress issue here. in fact the opposite NBA evinces quite congressional 484(a) na- It in 12 C. that “[n]o U. S.
purpose. provides except bank shall be visitorial powers tional subject authorized Federal law.” this exemption as Although more been in place has visitorial authority (national “shall see 13 Stat. §54, 140 years, than than such other visitorial powers be to any it is act”), this significant authorized §484(a)’s blanket pre-emptive C. has never extended U. S. national bank subsidiaries. cover *26 ante, see is to the Court’s not, suggestion, This contrary history As complex oversight. some kind of 19-20, has demonstrates, Congress legislated laws op- bank “affiliates” —an to national extensively respect more- has one affiliate15 —and type erating subsidiary 221a(b) “any corporation” include (defining § affiliates to 12 U. S. C. controls). member owns or that a federal supervisory given powers
over the OCC extensive over § (providing affiliates, those see 481 that federal examiner power thorough “shall have to make a examination all [a bank] doing affiliate, affairs of and in shall he so power... report findings Comp- have to make a his to the Currency”). troller of the That such lavished attention on national bank affiliates and such conferred far-reaching authority expanding on the without OCC ever 484(a) § scope speaks Congress’ pre- volumes about emptive intent, or lack rather its thereof. Consistent with presumption against pre-emption presumption our I do —a 484(a) reject not understand the Court would read —I Congress’ judgment pre-empt reflect considered not to application of state visitorial laws to national bank “affiliates.” 484(a) congressional
Instead, Court likens to a after thought, musing merely “[r]ecogniz[es] that it the burdens duplication produce.” and undue state could controls Ante, By logic, at 14. that I take it the Court believes impliedly pre-empt NBA would all state visitorial laws as §484(a) applied to national banks even did not exist. if surprising unlikely. That only Not would it reduce express pre-emption provision the NBA’s surplus- so to much age, give Congress’ greater but it would statutory silence dignity express Perhaps than an explains command. why none of the four to have Circuits addressed this issue pre-emptive relied on the force of the NBA itself. Each in regulations stead asked whether pre-empted the OCC’s Stranger laws.16 reasoning still, suggest Court’s would City See National Bank Turnbaugh, Indiana v. 325, 463 F. 3d (CA4 2006) 331-334 (holding state law conflicted with the regu OCC lations, Bank, NBA); not with the Burke, Wachovia A. N. 414 F. 3d (CA2 2005) (same); (CA6 2005) (case below) 315-316 431 F. 3d 560-568 (same); Fargo Boutris, (CA9 Wells Bank N. A. v. F. 3d 962-967 2005) (same). *27 exempted been from state have subsidiaries that authority first author- from the moment the OCC visitorial Reg. if 11459. Yet Fed. ized them in 1966. years surely point over the last 40 some true, at some
were spare gone its subsidi- would have to court national bank regulation; yoke banks are aries from the shy litigation. rights of their nor But neither heedless predate respondents point the OCC’s us to no such cases pre-emption regulations. §484(a)’s ignore limits Court itself rea- licenses significantly impair
soning prescriptions that “when state authority, enumerated or incidental under the the exercise regulations give way.” NBA, Ante, must at 12. the State’s impairment” “significant it refrain without But intones this merely remembering provides that it a useful tool—not the only congres- tool, not the best discover even tool—to explained Bank, As in Barnett this Court sional intent. we normally Congress “take[s] not the view that would want impair significantly, of a forbid, or to the exercise States granted.” power Congress explicitly S., at 33 517 U. added). any assumption Con- (emphasis But about what Congress “normally” when gress wants is of little moment exactly what said wants. has great puts weight Barnett refer- on Bank’s
The Court also “history interpreting grants enu- of both to our ... ence grants ‘powers’ banks as to national merated incidental ordinarily by, normally rather limited but contrary pre-empting, ne- Id., state law.” 32. The Court quite that this glects to mention that Barnett Bank clear (as only interpretive applies failed when has rule does) explicit pre-emptive intent. an it often manifest event, must consider whether Id., at “In that courts 31. nonspecific purpose,’ stat- federal statute’s ‘structure implicit, pre- clear, but utory language, reveal a nonetheless added). Ibid, (emphasis Barnett Bank emptive intent.” *28 nowhere that we can holds indicia of ignore strong congres- sional intent state whenever a law na- arguably trenches on all, tional bank After the case powers. emphasized that “is one question pre-emption basically congressional in- tent. Did the Federal Congress, Statute, enacting intend to exercise its constitutionally delegated set authority to Id., aside a the laws of at State?” 30. The answer here a no. resounding
Even if it were to delve into appropriate significant of this impairment case question, history very confirms that Brokers, neither Lenders, and Mortgage Servicers Act, §445.1651 Ann. et seq. Licensing Mich. Laws Comp. (West 2006), 2002 and nor the Supp. Secondary Mortgage (West et §Act, Loan 2005), 493.51 seq. conflicts with “the let ter or the general and objects purposes Congressional leg Bank, Davis Elmira islation.” Savings 161 U. 275, 290 (1896). Enacted to from protect consumers lend mortgage abuses, the Acts ing brokers, require mortgage mortgage servicers, and lenders to mortgage State, register §§445.1652(1) (West 493.52(1) (West 2006), 2005), Supp. submit certain §§445.1657(2) (West financial statements, 493.56a(2) (West 2002), 2005), and to submit visitorial (West §§ (West 2005). 2002), 445.1661 oversight, 493.56b Be cause the Acts that expressly provide do not they apply 445.1675(a) (West institution[s],” § financial “depository 2002), neither national nor state are covered.17 The statute therefore covers nonbank only companies under incorporated state law.18 17While the point Court at one Michigan provisions observes that “the ante, exempt 13, at issue national banks coverage,” from see at ante, “banks,” they because they not because are “national.” See at banks, both national (noting “Michigan’s statutory regime exempts state, added)). from state mortgage lending (emphasis regulation” 18 Michigan laws focus on consumer whereas protection, the OCC
regulations quoted by depositors. the Court of bank protection focus on ante, 16, n. 8. n. Mortgage Corporation Respondent has never Wachovia deposits. accepting engaged in the core business Mortgage to do first licensed In when Wachovia was company holding Michigan, it was owned business (Nei- respondent Bank, N. A. also Wachovia owned company holding business in Michi- nor the did ther the gan.) evidence, believe, that no reason to There is no imposed special Michigan compliance with the statutes Mortgage’s activities, or that trans- Wachovia burdens on ownership holding company to fer in 2003 its any changes required in its whatsoever it to make the bank *29 doing before nor after that Neither methods of business. grant- any discernible federal interest transfer was there applied immunity regulations ing company the evenhandedly competitors. its ac- to The mere fact that its banking parent pro- may performed its be tivities also immunizing justification it from at a feeble vides best longstand- justification regulation. it a the And is state clearly equality” “policy competitive ing congressional City, outweighs. S., 396 U. at 133. Plant See point Again, in the is whether however, it beside hamper judgment Michigan will laws Court’s through carry ability functions to out their banks’ Congress’ judgment mat- operating It subsidiaries. only pre-empted in the NBA has here, ters lodge purporting visito- authorities to with state those laws 484(a). my power In 12 U. S. C. rial over national banks. congressional eagerness silence to infuse view, the Court’s vitality most pre-emptive threatens the force with the applied at odds banks—a result as to national laws history federal long of dual state and and unbroken system of to our federal mention banks, over national not troubling so especially that the government. Court It is protect designed con- Michigan blithely pre-empts laws quintessentially protection a “field sumers. Consumer which the States have traditionally occupied,” Rice, S., 230;19 at the Court should therefore have been all more reluctant conclude that the “clear and manifest pur- was to set pose Congress” aside the laws of a sovereign State, ibid.
IV maintain that even if the NBA Respondents lacks pre- force, the use of the emptive GLBA’s phrase “same terms and conditions” a reflects congressional intent pre-empt state laws as they apply mortgage lending subsidiaries. See U. S. Indeed, C. §24a(g)(3). the Court much, as obliquely suggests its salting analysis GLBA. See ante, the NBA with references 19-20. a Even review of cursory the GLBA’s text shows (and that it cannot bear weight pre-emptive respondents Court) would to it. perhaps assign “same terms and phrase conditions” in the appears of “financial subsidiary,” provision definition statute national bank conferring there, Even powers. serves to describe what a financial is not. only subsidiary financial 24a(g)(3) subsid- (defining subsidiary “other than a iary subsidiary that... in activi- solely engages ties that national banks are permitted engage directly *30 and are conducted to the same terms and subject conditions that of such govern conduct by banks”). from this reference, the GLBA Apart slanting never mentions Far subsidiaries. from a demon- operating stration that the “clear and manifest of purpose Congress” Rice, was to here, of issue law at pre-empt type S., at 230, the “same terms conditions” at most language reflects an uncontroversial that acknowledgment subsidiaries national banks to the same federal Abrams, (CA2 Corp. See also General Motors F. 2d 41-43 1990) (“Because protection law a traditionally regulated consumer field by states, compelling an intention to preempt evidence of is required area”). in this parents.20 nothing oversight It has as their national pre-emption. with to do pre-emptive
Congress intent. in fact disavowed such “Operation Law,” of the GLBA is titled State Section 3,000 words to ex it more than 113 Stat. devotes pre Congress plaining meant the GLBA to laws which state oddity empt. of a that addresses aside the Leave pre-emption exquisite provision one of the GLBA detail in only (according respondents) ex four words to uses but More press pre-emptive in the statute. intent elsewhere 104(d)(4) u[n]o provides importantly, that State statute .. . by preempted” unless statute has a be the GLBA shall federally depository disparate impact chartered institu on depository “prevent[s] a or affiliate thereof tions, institution permitted engaging or this in activities authorized from generally “eonflict[s] or the intent of this Act Act,” permitted by permit Fed affiliations that are authorized added) (codified (emphasis Id., at at 15 eral law.” 6701(d)(4)). Michigan that the C. No one claims laws U. S. “pre discriminatory, affiliations, or issue here are forbid subsidiary engaging any operating vent” necessarily does not that the GLBA activities. It follows pre-empt them. something assuming phrase has to do with
Even pre-emption, simply nonencroach- not the case that the engage- regulation is a and condition” of state “term ment banking. matter, As a historical in the business of ment always applied banks and have have to national laws banking. See National on the business often encroached (observing “are sub- Bank, 9 at 362 that national Wall., daily governed in ject their and are State, to the laws than the State far more laws of business course nation”). acknowledges that state The Court itself govern property usury, the activities of law contract, and regulatory maintains (noting the OCC Reg. 11460 See 31 Fed. *31 subsidiaries). operating oversight of ante,
national banks and their at subsidiaries, 11-12, notwith- “all vary that across States which they banks standing the ante, 13. State law has always operate,” provided the which national make legal backdrop estate against real fact loans, and that “[t]he a banking agencies maintain close of the with a view surveillance industry toward pre- unsound venting might or lead practices impair liquidity to does not make federal insolvency all- banking regulation Philadelphia United States Nat. Bank, pervasive.” U. S.
V view, In the most my questions this pressing case whether has to the Congress delegated Comptroller the authority to the laws of Currency pre-empt sovereign State as if apply subsidiaries, they operating so, whether that authority was exercised here. properly (2006) (“State §7.4006 12 CFR laws to national apply subsidiaries same extent those laws bank”). to the apply parent Without an- directly either swering question, Court concludes that pre- is the emption “necessary of various consequence” congres- Ante, sional statutes. at 20. Because I read those statutes (as I must consider did the differently, four Circuits to have issue) addressed this whether an administrative can agency assume laws enacted of a power displace duly state legislature.
To with, begin knows how to authorize executive pre-empt laws.21 It not done agencies has so here. 21See, (d) g., e. §§ 253(a), 47 U. C.S. (authorizing the Federal Communica statute, to pre-empt tions Commission "any regulation, legal [state] requirement” “may prohibit or have the prohibiting effect of the abil any ity entity provide any interstate or intrastate telecommunica service”); U. 1254(g) tions S. C. (pre-empting statute that any conflicts purposes requirements chapter” “the and the of this permitting Secretary Interior forth regulation “set State law or 5125(d) is preempted which and superseded”); 49 S. C. (authorizing
39 to does the banks en provision authorizing Nor statutory to of that their in certain lines business are “incidental” gage the of business of and funds de accepting managing primary or the the to OCC grant power positors expressly implicitly or from banks their subsidiaries state immunize regulation.22 § 24 there is vast obvious C. Seventh. For a See U. S. or between conduct difference rules authorizing regulating The rules regulation. Comp granting immunity to decide whether troller well have the may authority broker, broker, a a estate a of real or mortgage as to “incidental” bank travel should be characterized agent businesses, into bank’s those and to a approve entry ing, e. Na See, either or its subsidiaries. directly through g., Co., C.,N. A. v. Ins. Annuity tionsBank N. Variable of Life (1995) 251, 258 513 U. S. OCC’s (upholding interpretation of the “incidental banks powers” provision permit sales). But that lesser annuity power to serve agents immunize or the far does imply greater power the conduct of subsidiaries from state laws regulating their “the As we said almost 40 their competitors.23 years ago, Secretary a or local Transportation to decide whether statute transportation with the of hazardous regulation conflicts waste that pre-empted). regulatory pre-emption did an indirect reference to make Branching Act of Banking Efficiency Riegle-Neal Interstate 43(a)). (codified § Act 114,108 Riegle-Neal at 12 S. C. Stat. 2367 U. procedural hoops (specifi through additional requires jump the OCC rules) comment, opinion interpretive letters and cally, notice and even application to na preempts law a “conclud[ing] Federal before reinvestment, community consumer regarding bank of State law tional intrastate branches.” protection, lending, fair establishment terms, however, provision granted pre-emption no By its own this Ibid. authority to the OCC. regulation, OCC separate pre-emption In adoption a recent a §§93a and 371. displace its state laws located the source of Reg. provisions generic authorizations 69 Fed. Both however, says a authority, pre word about rulemaking and neither (“[T]he Currency of the is au- S. C. 93a Comptroller See U. emption. congressional policy competitive equality defer- its ence to state standards” not “open modification City, Plant S., Comptroller Currency.” 138.24 (and not) I
Were I am inclined assume congres- sional silence be read as should conferral pre-emptive I not find has authority, would OCC exer- actually *33 cised here. When the any such agency promul- “[t)he §7.4006, it gated CFR section itself explained preemption law; does not State it reflects the effect of Federal reach, conclusion we believe a court would even in of . absence . . .” Fed. regulation Reg. (2001) added). at (emphasis Taking the OCC its word, then, own, 7.4006 has no force of but pre-emptive its merely pre- dicts a how federal court’s will analysis proceed. prescribe regulations carry thorized rules responsibilities to and to out the 371(a) office”); § of the (authorizing national to make real estate “subject loans to ... requirements Comptroller such restrictions and as the order”). Currency may prescribe by regulation or to say, Needless they provide no pre- textual foundation for the OCC’s assertion emption authority. 24 This conclusion not touch holding properly pro does our eases that a mulgated agency regulation pre-emptive can have a should it conflict effect Hillsborough law. See County state v. Automated Medical Labora tories, Inc., (1985)(“We repeatedly 471 U. S. have held that state pre-empted by laws can be well regulations federal as as federal stat utes”); Cuesta, Fidelity see also v. Fed. Sav. & Loan Assn. De la (1982) (holding regulation U. authorizing 154-159 that a federal savings-and-loan to in mortgage associations include due-on-sale clauses contracts conflicted with a state-court doctrine that such clauses were un (1988)(find enforceable); FCC, City 57, 59, 65-70 New v. York 486 S.U. ing that the adoption “regulations FCC’s that establish technical stand govern quality pre-empted ards signals” of cable television local standards). quality signal My analysis agency regu is rather confined to (like here) lations “purpor[t] scope one at issue settle preemption” federal agency’s an the pre “reflec[t] effort transform emption judicial question inquiry from a into an administrative accom fait Note, pli.” Regulatory Preemption of Predatory Unwarranted (2004). Lending Laws, 79 N. U. Rev. Y. L. its if intend
Even did regulation pre-empt OCC Chevron would still here, laws at not merit issue state a such No this Court has ever applied case from deference. could so eas standard to an decision that agency deferential sure, To balance. be expert federal-state disrupt ily with a federal to which laws conflict state opinions agency when be entitled “some especially statute may weight,” “the “the matter technical” and relevant history Geier are and extensive.” complex background Co., Honda American Motor 861, 883 But 529 U. S. agencies administrative Congress, clearly “[u]nlike States, with rela the interests yet designed represent detailed tive can ease they promulgate comprehensive for ramifications that have broad regulations pre-emption Id., For (Stevens, J., law.” at 908 dissenting).25 fed reason, when an to decide the agency purports scope for state eral healthy respect sovereignty pre-emption, than Chevron deference. See 529 calls less something Medtronic, at 512 S., 518 U. S., 911-912; see also *34 (“It J., and (O’Connor, dissenting part) concurring part not that an the determining is certain agency regulation any entitled federal statute is effect of pre-emptive deference”). the the
In neither of OCC event, justifications two. §7.4006 12 CFR withstand advanced when it promulgated Chevron the First, the observed that GLBA OCC analysis. of national banks to the authority “expressly acknowledged national conduct own subsidiaries” “ the to the same terms conditions govern ‘subject 66 Fed. Reg. conduct of such activities national banks.’” § also The agency C. 24a(g)(3)). (quoting ” “ and conditions’ had the ‘same terms noted that folded 66 Fed. Reg. into an regulation, implementing language 737, L. Mendelson, Preemption, Rev. 102 Mich. See also Chevron (2003-2004) generally agencies are insensitive (arguing that 779-790 concerns). federalism 5.34(e)(3)(2001)). (citing According 12 CFR to the component “[a] descriptions
OCC, of fundamental these of operating the of characteristics subsidiaries GLBA apply operating the rule is OCC’s that state laws subsidi- they apply parent aries to the same extent as to the Reg. bank.” 66 Fed. 34788. explained above,
This is incorrect. As the GLBA's off- says language hand use of the “same terms and conditions” nothing pre-emption. supra, about 36-38. Nor can incorporation language regulation the OCC’s of that a into support agency’s “Simply position: put, the existence of parroting regulation change does not the fact that the question meaning regulation here not is but the meaning Oregon, statute.” Gonzales v. 546 S.U. argument contrary particu- OCC’s larly given surprising promulgated that when it its “same regulation, terms and conditions” it said one word about pre-emption implications or the federalism its rule —an inexplicable component” if a elision “fundamental phrase operate oversight. need to unfettered state (2000) Compare Reg. 65 Fed. 12905-12910 Exec. Order (1999) §§ Reg. (requiring 2,4,64 43255,43257 No. Fed. agencies explicitly implications” consider the “federalism policies of their pre-empting chosen and to hesitate before laws). Second, the OCC describes subsidiaries “as departments equivalent parent divisions their Reg. operation through banks,” Fed. which, 484(a), 12 U. S. would not C. be to state visitorial powers. might The OCC claims that national banks desire through operating to conduct their business subsidiaries for *35 purposes “controlling operations improving the costs, of ef- supervision, of fectiveness more accurate determination of profits, decentralizing management separat- [and] decisions ing particular operations operations.” of the bank other from (quoting Brief for United States Amicus Curiae 19 31 11460). obvious, a however, It that is Fed. Reg. realize all of those benefits the through straight- could of the and making corporation
forward expedient dissolving a bank. parent “division” it in fact a “department” of an Rather, maintaining operat- the advantage primary is that shields as a corporation subsidiary separate ing liabilities. subsidiaries’ national bank (“It (1998) States v. Bestfoods, 51, United is a law in our of deeply principle corporate ingrained general ... a systems corporation economic legal parent (internal of its quotation acts subsidiary” not liable omitted)). reason, the OCC’s For that regulation marks structure,” ante, at 18, far more than mere “corporate about Fargo ante, Wells or “internal governance,” (citing Boutris, (CA9 Bank N. A. v. 2005)); 3d see 419 F. Patrickson, (2003) Co. also Dole Food U. S. matters”). (“In It is law structure often issues corporate state corporation with a can avoid about whether complying state nevertheless take advantage regulations, yet The federal inter- its owners from laws liability. insulating sub- in national banks from their est protecting depositors immu- liabilities does not surely grant sidiaries’ justify the OCC’s Indeed, from laws competitors. nity apply from state seeking refuge drive may companies regulation those state arms federal harm into the parents, regulation bene- to find a federal who enough lucky competitors the affairs factor, ability regulate States’ hamstring result, As a OCC’s regulation of state corporations. threatens both the dual banking system principle . that is its cornerstone.
competitive equality
VI a final comment. merits today’s holding novelty an administra- is a case about this the Court says, Whatever I state laws. agree tive pre-empt agency’s power preclude does not Tenth Amendment Court *36 exercise of that But the that fact power. Amendment included the Bill was should Rights nevertheless remind its affects the Court allocation ruling of powers the reasons Indeed, for among sovereigns. adopting Amendment those that precisely undergird well- established presumption against pre-emption.
With rare we have found exception, pre-emption only Cipollone, it, when statute see federal commanded when S., a conflict between federal and state law see Florida Lime & obedience both precluded sovereigns, Paul, Growers, Avocado Inc. v. U. S. 132, 142-143 (1963), or when a federal statute so a field that completely occupied Napier left no room additional state see regulation, Co., Atlantic Line R. Coast U. S. Al most invariably has finding pre-emption been based on this Court’s interpretation or of statutory language authorized regulations Never plainly by Congress. before have we endorsed administrative action whose sole purpose was to state law rather than to pre-empt a statu implement command. tory I dissent.
Accordingly, respectfully