Watters v. Wachovia Bank, N.A.

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

In Watters v. Wachovia Bank, the Supreme Court, in a 5-3 decision, ruled that Michigan mortgage
lending requirements do not apply to a state-chartered operating subsidiary of a national bank.
The decision was based on the Court’s interpretation of various provisions of the National Bank
Act, including provisions granting national banks the power to make real estate loans; the
“incidental powers” clause, under which national banks have been authorized by the Office of the
Comptroller of the Currency (OCC), the regulator of national banks, to conduct banking activities
in operating subsidiaries; and a provision granting the OCC exclusive “visitorial” powers over
national banks. This report summarizes the rulings in the case and potential implications. This
report will not be updated.

Backgr ound ......................................................................................................................... 1
Appellate Court...................................................................................................................2
Supreme Court Decision.....................................................................................................2
Possible Implications..........................................................................................................4
Author Contact Information............................................................................................................5

Watters v. Wachovia Bank² involves a challenge to a regulation promulgated by the federal agency
that charters and regulates national banks, the Office of the Comptroller of the Currency (OCC). ³
OCC’s authority has been upheld both by the lower courts in this case and by three other federal ⁴
appellate courts. The regulation, 12 C.F.R. § 7.4006 (§ 7.4006), reads, in pertinent part: “Unless
otherwise provided by Federal law or OCC regulation, State laws apply to national bank
operating subsidiaries to the same extent that those laws apply to the parent national bank.” The
lower courts have held § 7.4006 preempts the application of the Michigan Mortgage Brokers, ⁵
Lenders, and Services Licensing Act, to Wachovia Mortgage Corporation (“Wachovia
Mortgage”), a state-chartered subsidiary of Wachovia Bank (Wachovia or the Bank), a national
bank. The Michigan law requires state registration of mortgage brokers, imposes fees and various
standards upon them, and authorizes state regulators to investigate consumer complaints not
being pursued by federal regulators.
The OCC relies primarily on two provisions to promulgate its regulation: 12 U.S.C. § 24 Seventh
(§ 24) and 12 U.S.C. § 484(a), both of which are part of the National Bank Act (NBA). Section 24
authorizes national banks to exercise, “all such incidental powers as shall be necessary to carry on
the business of banking.” Section 484(a) specifies that “no national bank shall be subject to any
visitorial powers except as authorized by federal law, vested in the courts of justice or such as
shall be exercised by Congress....” In the banking context, visitorial powers involve the authority
to “visit” a bank and examine its activities and observance of laws and regulations, including the
examination of records. By promulgating its regulation, the OCC has determined that the creation
of subsidiaries is an “incidental power” of national banks and that visitorial powers are
exclusively allocated to the OCC with respect to subsidiaries as well as to national banks.
The district court ruled the Michigan law inapplicable to state-chartered operating subsidiaries of
national banks by holding that the OCC had authority to preempt state law under the NBA. It ⁶
used a rationale called the Chevron test to review the OCC’s interpretation of its authority. The
test has two components or prongs: (1) If Congress has directly spoken on the precise question at
issue and its intent is clear and unambiguous, courts must defer to that interpretation of the law.
(2) If the meaning or intent of a statute is silent or ambiguous, courts must give deference to the
agency’s interpretation of the law if it is based on a permissible and reasonable construction.
Concluding that Congress has not spoken on the precise question in this case, the court used the
second prong of the Chevron test and deferred to the OCC’s interpretation of its “broad and

¹^T^h^is^r^e^por^{t w}^a^s^or^ig^ina^lly^pr^e^p^a^r^e^d^on^A^u^g^u^s^t^1,²⁰^06,^by^A^a^r^{on D}^r^olle^r^,^w^{ho w}^a^s^theⁿ^a^L^a^w^C^l^e^r^k^{in the}^A^m^e^r^ic^aⁿ
^L^a^w^Dⁱ^vⁱ^sⁱ^on.
²⁽^N^o.^05-¹³⁴²⁾⁵⁵^{0 U}^.^S^.^_^_^_⁽²⁰⁰⁷⁾^.
³^W^a^c^hov^ia^Ba^nk^v^.^W^a^tte^r^s^,³³⁴^F.Su^pp^{. 2}^d⁹⁵^{7 (}^W^.D^{. Mic}^h^{. A}^u^g^u^s^t³⁰^,²⁰⁰⁴⁾^;^W^a^c^hovⁱ^a^B^ank^{, N}^.^{A. v}^.^W^a^tte^r^s^{, 43}¹
^F^.^3d⁵⁵^{6 (}⁶^th^Cⁱ^r^.²⁰⁰⁵⁾^.
⁴^W^a^c^hov^ia^Ba^nk^{, N}^.^A^.^v^.^B^u^r^k^e^{, 4}¹⁴^F.3^d³⁰^{5 (}²^{d C}ⁱ^r^.²⁰⁰⁵⁾^;^W^e^lls^Far^g^{o B}^ank^{, N}^.^{A. v}^.^Bo^utrⁱ^s^,⁴¹⁹^F^.^3d⁹⁴⁹⁽⁹^th^Cir.
²⁰⁰⁵⁾^{; a}^nd,^N^a^ti^on^{al C}ⁱ^ty^Ba^nk^of^I^ndi^an^{a v}^.^Turⁿ^ba^ug^h^,⁴⁶^{3 F}^.³^d³²⁵⁽⁴^th^Cⁱ^r^.²⁰⁰⁶⁾^.
⁵^MC^L⁴⁹³^.5¹^et^seq^{; MC}^L⁴⁴^5.1⁶⁶¹^.
⁶^Se^e^C^h^e^v^r^{on U}^.^S.A^.^v^.^N^a^tio^na^l^Re^s^our^c^e^s^D^e^fe^ns^e^C^ounc^il^,⁴⁶⁷^U^.^{S. 8}³⁷⁽¹⁹⁸⁴⁾^.

pervasive”⁷ authority to regulate national banks and their subsidiaries. It found that under the
NBA, the OCC has exclusive visitorial authority over national banks, including their duly
authorized operating subsidiaries. Since the Michigan law conflicted with the federal regulation, ⁸
the court permitted federal preemption of state law. The district court also held that the OCC had ⁹
not violated the Tenth Amendment to the U.S. Constitution. While the Commissioner of the
Michigan Office of Insurance and Financial Services (Commissioner) suggested that § 7.4006
federalized a state corporation by converting it into an instrumentality of federal law, the court
dismissed this claim by asserting that Congress had authority to regulate national banks under the ¹⁰
Commerce Clause and, thus, there was no violation of the Tenth Amendment.
The United States Court of Appeals for the Sixth Circuit affirmed the judgment of the district
court by holding that the NBA authorized the OCC to issue regulations covering both national
banks and their subsidiaries pursuant to congressional authorization of “incidental powers” to ¹¹
national banks. The Commissioner contended that the OCC, without adequate statutory ¹²
authorization, expanded the definition of “national banks” to include “operating subsidiaries.”
The appellate court, however, deferred to the OCC under Chevron and held that “incidental
powers” included the authority to conduct business through an operating subsidiary, and that the
exclusive visitorial powers of national banks trumped any state authority to examine their ¹³
operating subsidiaries. The court also affirmed the district court’s ruling on Tenth Amendment
implications.
The Supreme Court, in a 5-3 decision, ruled that NBA preempts state regulation of the mortgage
lending activities of national bank operating subsidiaries. The majority opinion was written by ¹⁴
Justice Ginsburg, joined by Justices Kennedy, Souter, Breyer, and Alito. It holds that: “A
national bank has the power to engage in real estate lending through an operating subsidiary,
subject to the same terms and conditions that govern the national bank itself; that power cannot be ¹⁵
significantly impaired or impeded by state law.” The basic premise of the opinion is that, under
the NBA’s real estate lending and incidental powers clauses, Congress gave national banks the
power to conduct real estate lending activities in operating subsidiaries and that grants of

⁷^W^a^c^hov^ia^Ba^nk^v^.^W^a^tte^r^s^{, 33}^{4 F.}^S^u^p^p^{. 2d}^a^t⁹⁶^4.
⁸^Se^e^{CRS Rep}^o^{rt RL}³²¹⁹⁷^,^Pr^e^e^m^p^tio^{n o}^f^St^ate^L^a^w^f^o^r^N^a^tⁱ^o^nal^Bank^s^aⁿ^d^Theⁱ^r^Su^bs^id^iarⁱ^e^s^by^t^h^e^O^ffic^e^of^the
^C^o^m^p^tr^ol^le^r^{of t}^h^e^C^u^r^r^e^nc^y^,^by^{M. Ma}^ur^e^eⁿ^Mur^phy^.
⁹^Uⁿ^ite^d^Sta^t^e^s^C^ons^t^itutⁱ^oⁿ^{, A}^m^endm^eⁿ^{t X r}^e^a^d^s^,^“^T^he^pow^e^r^s^not^de^le^g^a^te^{d to t}^h^e^Uⁿ^ite^{d Sta}^t^e^s^by^the^C^o^ns^tit^utio^n,
ⁿ^o^r^p^r^ohⁱ^bⁱ^t^e^d^b^yⁱ^t^t^o^t^h^{e st}^at^es,^{are reser}^v^ed^t^o^t^h^{e st}^at^{es resp}^ectⁱ^v^el^y^,^o^r^t^o^t^h^{e p}^e^op^l^e^.^”
¹⁰^{For sc}^o^p^e^aⁿ^d^p^u^rp^ose^of^this^a^m^e^ndm^eⁿ^{t, se}^e^John^ny^Killiaⁿ^et^a^l^.^,^Uⁿ^ite^d^St^ate^s^Co^ns^titu^tio^{n: A}^nal^y^s^is^and
^Inte^rpre^tati^on^,¹⁶¹¹^-¹⁶¹^{2 (}²⁰⁰⁴^e^d^.)^.
¹¹^W^a^c^hov^ia^Ba^nk^{, N}^.^A^.^v^.^W^a^tte^r^s^,⁴³¹^F.^3d⁵^{56 (}⁶^th^Cⁱ^r^.^D^e^c^e^m^b^e^r^19,²⁰⁰⁵⁾^.
¹²^{In t}^h^{is a}^r^g^u^m^e^{nt, the}^Com^mⁱ^s^s^ione^{r re}^lie^{d o}ⁿ^:^{ACLU v}^.^FCC^,⁸²³^F.2^d¹⁵⁵⁴⁽^D^.C^.^Cⁱ^r^.¹⁹⁸⁷⁾^;^Bo^ar^{d of}^G^o^v^e^r^nor^s
^{of t}^h^e^Fe^de^r^a^l^Re^s^e^r^v^e^Sy^s^t^e^m^v^.^Dⁱ^m^e^ns^{ion F}ⁱⁿ^anc^ia^{l C}^o^r^p^{, 47}^{4 U}^.^S.³⁶¹⁽¹⁹⁸⁶⁾^;^Mⁱⁿⁿ^e^s^ota^v^.^Fl^e^e^t^M^o^r^t^gage^C^o^r^p^,
¹⁸¹^F.^Su^pp.^2d⁹^{95 (}^D^.^Mⁱⁿ^n.²⁰⁰¹⁾^.
¹³^W^a^c^hov^ia^Ba^nk^,⁴³¹^F.^{3d a}^t⁵^61.
¹⁴^Ju^stⁱ^{ce T}^h^o^m^{as d}ⁱ^dⁿ^o^t^t^a^{ke p}^a^rtⁱⁿ^t^h^{e co}ⁿ^sⁱ^d^eratⁱ^o^{n o}^r^d^eci^si^on^o^f^t^h^{e case.}
¹⁵^W^a^tte^{rs v}^.^W^a^c^hov^ia^Ba^nk^{, N.A}^.,^s^{lip o}^p^.,^a^t¹⁶^.

authority to national banks generally preempt state law. The Court relied on the express language
of the visitorial powers clause, providing exclusive authority to OCC to examine and regulate
national banks, as indicative of congressional intent to protect the national banking system from
intrusive or inconsistent state laws. It reviewed a long line of cases, beginning with McCullough ¹⁶
v. Maryland, that have held the federal bank system generally immune to state laws negatively
affecting operations. The Court emphasized the reach of the NBA’s preemptive effect by
characterizing earlier decisions with respect to how they defined the test for determining whether
a state law was preempted by the NBA. It spoke of federal law as shielding national banks “from ¹⁷
unduly burdensome and duplicative regulation” and national banks as being “subject to state
laws of general application in their daily business to the extent such laws do not conflict with the ¹⁸
letter or the general purposes of the NBA. “ It emphasized that the standard the Court applied to ¹⁹
preempt state law in Barnett Bank of Marion County, N.A. v. Nelson extends to powers of the
national bank regulator, OCC, and to powers exercised under the incidental powers clause:
^{States ar}^{e p}^e^r^m^it^ted^to^r^e^g^u^l^{ate th}^{e activ}^itie^{s o}^fⁿ^a^tioⁿ^a^{l b}^aⁿ^k^s^w^h^er^{e d}^oⁱⁿ^g^so^d^o^e^{s n}^o^t
^p^r^ev^en^{t o}^r^si^gⁿⁱ^f^ican^tl^yⁱⁿ^ter^f^e^r^e^wⁱ^t^h^th^eⁿ^a^tioⁿ^a^{l b}^aⁿ^k^’^s^o^r^th^eⁿ^a^tioⁿ^a^l^b^aⁿ^k^r^e^g^u^lato^r^’^s
^ex^ercis^e^of^its^po^w^e^r^s^{. B}^u^t^w^h^en^s^t^{ate pres}^cr^ip^tioⁿ^s^si^gⁿⁱ^fⁱ^can^tl^yⁱ^m^p^a^ir^th^{e ex}^er^ci^{se o}^f²⁰
^au^th^orit^y^,^enum^{erated or in}^ciden^t^{al un}^{der th}^{e NB}^A^,^t^h^{e State}^’^s^regu^latioⁿ^s^m^u^s^t^gⁱ^v^e^w^a^y^.
The Court noted that operating subsidiaries have been authorized since 1966; are generally
subject to the same regulatory oversight as their parent national banks; are not treated as separate
economic enterprises by OCC; and have not been distinguished from national banks by the Court ²¹
in earlier cases testing the preemptive effect of national bank powers. In terms of the Court’s ²²
analysis, the focus was on “the exercise of a national bank’s powers, not its corporate structure.”
The Court found no Tenth Amendment issue and expeditiously rejected any concern that the issue
that had been central in the lower courts, preemption by regulation, was implicated. Both the trial
court and the court of appeals decisions looked at the question of whether, in the absence of clear
statutory delegation to an administrative agency, the authority to determine the preemptive effect
of a statute is a judicial prerogative. The Supreme Court, however, dismissed the issue as “an ²³
academic question” and “beside the point. The NBA, according to the Court, “is ... properly
read by OCC to protect from state hindrance a national bank’s engagement in the ‘business of
banking’ whether conducted by the bank itself or by an operating subsidiary, empowered to do ²⁴
only what the bank can do.” Essentially, the Court’s reliance on statutory preemption eliminated
the need for a Chevron analysis of whether courts should defer to OCC’s preemption regulation.

¹⁶^{17 U}^.^{S. (}⁴^W^h^e^a^t^{. 3}¹⁶⁾⁽¹⁸¹⁹⁾^.
¹⁷^W^a^te^r^s^v^.^W^a^c^hov^ia^Ba^nk^{, N}^.^A^.^,^N^o^{. 0}⁵^-¹³⁴^{2 ,}^s^lip^op^{., a}^t^9.
¹⁸^Id.,^s^lip^op^{., a}^t^9.
¹⁹⁵¹^{7 U}^.^S^.²⁵^,³²⁽¹⁹⁹⁶⁾⁽^u^ph^ol^din^g^na^tiona^l^ba^nk^s^a^le^s^of^ins^u^r^a^nc^e^f^r^o^m^of^fⁱ^c^e^s^{in sm}^a^{ll tow}ⁿ^s^de^s^p^ite^a^c^onf^lic^ting
^st^at^{e st}^at^u^t^{e ).}
²⁰^W^a^tte^{rs v}^.^W^a^c^hov^ia^Ba^nk^{, N.A}^.^,^s^{lip o}^p^.,^a^t^7.
²¹^Id.,^a^t¹¹^-1^3.^B^a^rⁿ^e^tt^Ba^nk^{of M}^a^rⁱ^{on C}^o^uⁿ^ty^v^.^N^e^ls^oⁿ^,⁵¹^{7 U}^.^S.^{25 (}¹⁹⁹⁶⁾^inv^o^lv^e^d^aⁿ^ins^u^r^a^nc^e^ope^r^a^ting
^s^ubs^idia^r^y^of^a^na^tiona^l^ba^nk^;^Cl^a^r^k^e^v^.^Se^c^u^ritie^{s Ind}^u^stry^Assn.^{, 4}⁷⁹^U^.^{S. 38}⁸⁽¹⁹⁸⁷⁾^,^a^dis^c^o^{unt br}^ok^e^r^a^g^e^ope^r^a^ting
^subsidia^ry^.
²²^Id.,^a^t¹³^(e^m^pha^sⁱ^s^{in or}^ig^ina^l^).
²³^Id.,^a^t¹³^.
²⁴^Id.

A strong dissenting opinion, written by Justice Stevens, joined by Chief Justice Roberts and
Justice Scalia, emphasized the absence of clear statutory language stating that national bank
operating subsidiaries need not comply with state laws regulating mortgage brokers. It noted that
the Supreme Court decisions, even those upholding the preemptive effect of various powers
granted to national banks carefully recognized that a wide range of national bank operations are
committed to state oversight:
^Un^{til to}^d^a^y^,^w^e^h^a^v^e^r^e^m^aⁱⁿ^ed^f^a^ith^f^u^{l to}^th^{e p}^rⁱⁿ^cip^l^{e th}^{at n}^oⁿ^d^iscrⁱ^mⁱⁿ^ato^r^y^la^w^s^o^f
^g^eⁿ^e^r^a^{l ap}^p^licatioⁿ^t^h^{at d}^oⁿ^o^t^‘^f^o^r^b^id^’^o^r^‘ⁱ^m^p^air^sigⁿⁱ^f^ic^an^tl^y^’ⁿ^a^tioⁿ^a^{l b}^aⁿ^k^act^iv^it^ies
^s^h^oul^{d n}^o^t^{be preem}^pt^ed.
*****
^Coⁿ^g^r^e^ss^ha^s^c^o^nsi^s^t^e^nt^l^y^r^e^c^o^gni^z^e^d^t^h^a^t^st^a^t^e^l^a^w^mus^t^u^s^u^a^l^l^y^g^o^v^e^rn^t^h^{e act}ⁱ^vⁱ^tⁱ^e^s^of^bot^h²⁵
ⁿ^a^tⁱ^oⁿ^a^l^aⁿ^{d s}^t^at^{e bank}^s^f^o^{r t}^h^{e du}^al^ban^kⁱ^ng^sy^s^t^e^m^t^o^operat^e^ef^f^e^c^tⁱ^v^e^l^y^.
It also noted that national bank subsidiaries have not been directly authorized by Congress and
found congressional acquiescence in OCC’s “expansive interpretation of its authority ... a plainly ²⁶
insufficient basis for finding preemption.”
This decision is likely to be viewed favorably not only by national banks, but also by some others ²⁷
in the banking industry as a clarification of distinctions between federal and state bank charters.
On the other hand, consumer advocates may find only minimal solace in the fact that the decision
actually involves only one state’s laws covering licensing and reporting requirements of a
mortgage broker subsidiary of a national bank.
Although all state laws regulating the terms and conditions of loans were not actually before the
Court, OCC regulations are broadly written to preempt state laws on virtually every aspect of the ²⁸
core banking business: real estate lending, deposit-taking, and non-real estate lending.
Moreover, there are regulations extending the preemptive effect to national bank operating ²⁹
subsidiaries and covering all state laws that “obstruct, impair, or condition a national bank’s ³⁰
ability to fully exercise its powers to conduct activities under Federal law.” The dissent included
a prediction of the potential effect this decision might have on the applicability of state consumer
protection laws:
^{... th}^{e C}^o^u^r^t’s^ea^g^e^rn^e^s^s^to^infu^s^e^coⁿ^g^r^e^s^sⁱ^on^a^l^sⁱ^len^ce^wⁱ^t^h^preem^pti^v^e^f^o^{rce th}^reateⁿ^s^th^e
^vⁱ^t^a^lⁱ^t^y^o^f^m^o^st^st^at^{e l}^a^w^s^a^s^a^pplⁱ^e^{d t}^oⁿ^a^tⁱ^oⁿ^a^l^bank^s—^{a re}^s^u^l^t^at^odds^wⁱ^t^h^t^h^{e l}^oⁿ^g^an^d
^unb^r^o^ke^{n hi}^st^o^r^y^o^f^d^u^a^l^st^a^t^e^aⁿ^d^fe^d^e^r^a^l^a^u^t^h^o^rⁱ^t^y^o^v^e^r^na^tⁱ^o^na^l^b^a^nk^s,^no^t^t^o^m^e^ntⁱ^o^{n o}^u^r
^f^e^d^e^r^a^{l s}^y^ste^m^o^f^g^o^v^e^rⁿ^m^eⁿ^t^.^I^t^is^esp^eciall^y^tr^o^u^b^lin^g^th^a^t^t^h^e^Co^u^r^t^so^b^lit^h^e^l^y^p^r^ee^m^p^t^s

²⁵^W^a^tte^{rs v}^.^W^a^c^hov^ia^Ba^nk^{, N.A}^.^,^Ste^v^eⁿ^s^J^{., dis}^s^e^ntiⁿ^g^,^s^lip^o^p^{., a}^t^3-4.
²⁶^Id.,^s^lip^op^{. a}^t¹⁰^.
²⁷^Se^e^R^.^C^h^rⁱ^s^tia^{n B}^r^uc^e^,^“^Q^ue^s^tio^ns^R^a^is^e^d^A^{bout O}^C^C^Pr^e^e^m^{ption A}^s^J^u^s^tic^e^s^E^y^e^C^a^se^{on B}^a^nk^S^ubs^id^ia^rⁱ^e^s^,”⁸⁷
^{BNA Ba}^nkⁱⁿ^{g Re}^p^o^rt²⁰^{2 (}^J^u^l^y³¹^,²⁰⁰⁶⁾^.
²⁸^{12 C}^.^F.R^.^§^§³⁴^.⁴^,^7.4⁰⁰⁷^{, a}^nd^7.⁴⁰⁰^8.
²⁹^{12 C}^.^F.R^.^§^7.4⁰⁰⁶^.
³⁰^{12 C}^.^F.R^.^§^7.⁴⁰^09.

^Michⁱ^g^an^la^w^s^d^e^si^gⁿ^e^d^to^p^r^o^t^{ect co}ⁿ^s^u^m^er^{s. Co}ⁿ^s^u^m^er^p^r^o^t^ectioⁿ^{is q}^uⁱⁿ^tesseⁿ^tia^ll^y^a³¹
^‘^f^ield^w^h^ic^h^t^h^{e State}^s^h^a^v^e^tr^ad^itioⁿ^a^ll^y^o^c^c^u^pⁱ^ed^.’
Considering the size³² of the national bank subsidiary presence in the real estate lending business, ³³
the impact of this decision is likely to increase the calls for federal legislation. States and some
Members of Congress have been expressing the view that preemption of state banking laws will
disturb the delicate balance of the dual banking system, particularly with respect to the dilution of ³⁴
consumer protection laws. Preemption of state consumer protection laws, including the
increasing number of predatory lending laws, carries with it various implications in terms that
may garner attention from legislators.
Among the issues that might be raised in legislative oversight are (1) the competitive edge
preemption gives to national banks over state-chartered banks which must comply with state
laws; (2) the extent of the gap left by the possibility that state consumer protection laws would no
longer cover national banks; (3) the sufficiency of OCC’s consumer protection enforcement
regime and personnel to replace the enforcement activities of 50 state attorneys general and
administrative agencies policing; and (4) the extent to which OCC’s expertise is adequate to the
task of licensing and regulating the array of national bank subsidiaries.
^{M. Mau}^r^een^M^u^rphy
^L^e^gⁱ^s^l^at^iv^{e A}^t^torn^e^y
^mm^u^r^phy^@crs^.l^oc.g^ov^{, 7}^-⁶⁹⁷¹

³¹^W^a^tte^{rs v}^.^W^a^c^hov^ia^Ba^nk^{, N.A}^.,^Ste^v^eⁿ^s^J^{., dis}^s^e^ntiⁿ^g^,^s^lip^o^p^{. a}^t^15.
³²^“^A^{t the}^e^{nd of}^Ma^rc^h^[20⁰⁷^]^,^the^r^e^w^e^r^e^1,78^{6 na}^tⁱ^oⁿ^a^l^ba^nk^{s, c}^oⁿ^t^rolli^ng^ne^a^r^ly^{$7 trilli}^on^{in a}^sse^{ts, or a}^b^ou^{t 7}⁰
^pe^r^c^eⁿ^{t of}^the^c^o^m^m^e^r^cⁱ^a^l^ba^nk^ing^indus^tr^y^’^s^a^s^s^e^ts^.^A^bout¹⁰^pe^r^c^eⁿ^{t of}^th^os^e^ba^nk^s^ha^v^e^s^t^a^t^e^-^inc^o^r^por^a^t^e^d^ba^nk^ing
^s^ubs^idia^rⁱ^e^s^.”^R^obe^r^t^B^a^rⁿ^e^s^aⁿ^d^Dⁱ^na^ElB^o^g^h^d^a^d^y^,^“^H^ig^{h C}^our^t^Sⁱ^de^s^W^{ith B}^a^nk^s^on^Mo^r^t^g^a^g^e^R^u^le^s^;^Sta^t^e^s^C^a^n’^t
^Re^g^u^la^te^L^o^aⁿ^Subsi^d^ia^rie^s^,”^Wa^shⁱⁿ^gt^on^Po^st^,^B^-¹^,^co^l.^{1 (}^A^p^rⁱ^l¹⁸^,²⁰⁰⁷⁾^.
³³^Se^e^{CRS Rep}^o^{rt RL}³³⁸⁷⁹^,^H^o^us^{ing I}^s^s^u^e^s^{in t}^h^e¹¹⁰^th^C^o^ngr^e^s^s^{, c}^oor^di^na^te^{d by}^Lⁱ^bb^y^P^e^r^l^.
³⁴^Se^e^{CRS Rep}^o^{rt RS}²²⁰⁵⁷^,^Pr^e^e^m^p^tio^{n o}^f^St^ate^L^a^w^f^o^r^N^a^tⁱ^o^nal^Bank^s^aⁿ^d^Theⁱ^r^Su^bs^id^iarⁱ^e^s^by^Re^gul^atio^ns
^Issu^ed^b^y^t^h^{e Of}^fⁱ^{ce o}^f^t^h^{e C}^o^mp^t^r^o^l^l^e^{r o}^f^t^h^{e Cu}^rren^{cy: A}^S^ket^ch^,^by^{M. Ma}^ure^eⁿ^M^u^rp^hy^.