550 U.S. 1 (2007)
In 1997, Wachovia Mortgage Corporation, a North Carolina corporation engaged in real estate lending, registered with Michigan's Office of Insurance and Financial Services to conduct mortgage lending activities in the state.1
Michigan law at the time required such registration for mortgage brokers, lenders, and servicers that were subsidiaries of national banks, while exempting the banks themselves.2 As a registrant, Wachovia Mortgage paid annual operating fees, filed annual reports, and submitted to inspections by state examiners.3
On January 1, 2003, Wachovia Mortgage became a wholly owned operating subsidiary of Wachovia Bank, a national banking association chartered by the Office of the Comptroller of the Currency.4 Three months later, Wachovia Mortgage notified Michigan that it was surrendering its registration, asserting that as an operating subsidiary of a national bank it was no longer subject to state requirements.5 Petitioner Linda Watters, the commissioner of the Office of Insurance and Financial Services, responded that Wachovia Mortgage would no longer be authorized to engage in mortgage lending in Michigan.6
Wachovia Bank and Wachovia Mortgage then filed suit against Watters in the United States District Court for the Western District of Michigan.7 They sought declaratory and injunctive relief to prevent enforcement of Michigan's registration and inspection requirements against the operating subsidiary and to bar interference with OCC oversight.8
The district court granted summary judgment in favor of the banks on the preemption claims.9
The United States Court of Appeals for the Sixth Circuit affirmed that judgment.10 The Supreme Court granted certiorari to review the case.11
Whether Wachovia’s mortgage business, whether conducted by the bank itself or through the bank’s operating subsidiary, is subject to OCC’s superintendence, and not to the licensing, reporting, and visitorial regimes of the several States in which the subsidiary operates?12
The NBA vests in nationally chartered banks enumerated powers and all necessary incidental powers under 12 U.S.C. §24 Seventh.13 To prevent inconsistent or intrusive state regulation, the NBA provides that no national bank shall be subject to any visitorial powers except as authorized by Federal law under §484(a).14 Federally chartered banks are subject to state laws of general application to the extent they do not conflict with the NBA, but when state prescriptions significantly impair the exercise of authority under the NBA, the State’s regulations must give way.15 National banks may conduct activities through operating subsidiaries subject to the same terms and conditions as the bank itself under §24a(g)(3)(A).16
Yes. The facts establish that Wachovia Bank is a national banking association chartered by OCC.17 Wachovia Mortgage became its wholly owned operating subsidiary on January 1, 2003.18 Michigan law exempts national banks from its mortgage lending regulation but requires subsidiaries to register.19
The NBA authorizes national banks to engage in real estate lending under §371 and through operating subsidiaries.20 State law may not significantly burden a national bank’s exercise of that power, and real estate lending by a national bank is immune from state visitorial control under §484(a).21 The same protection applies to the operating subsidiary because OCC licenses and oversees it just as it does national banks, and the subsidiary may engage only in activities the bank itself could undertake.22
Wachovia’s mortgage business, whether conducted by the bank itself or through the bank’s operating subsidiary, is subject to OCC’s superintendence, and not to the licensing, reporting, and visitorial regimes of the several States in which the subsidiary operates.23
Related opinions on this issue
Joined by Chief Justice Roberts And Justice Scalia
Justice Stevens dissented, arguing that Congress has enacted no legislation immunizing national bank subsidiaries from compliance with nondiscriminatory state laws regulating the business activities of mortgage brokers and lenders.24 He emphasized the dual banking system and the presumption against preemption, noting that the NBA's visitorial exemption in §484(a) has never been extended to operating subsidiaries.25 Stevens concluded that the Michigan laws do not significantly impair national bank powers because they apply only to the separate state-chartered subsidiary and that the OCC's regulation lacks authority to preempt state law.26
He further observed that the GLBA does not supply the missing preemptive text and that the OCC regulation was not a reasonable interpretation of the NBA entitled to Chevron deference.27
Whether 12 CFR §7.4006 violates the Tenth Amendment?28
No. The regulation merely clarifies that state laws apply to national bank operating subsidiaries to the same extent as to the parent national bank.31 Since regulation of national bank operations is a prerogative of Congress under the Commerce and Necessary and Proper Clauses, the Tenth Amendment is not implicated here.32 The Amendment expressly disclaims any reservation to the States of a power delegated to Congress in the Constitution, and the NBA's authorization of national bank operations through operating subsidiaries falls squarely within that delegated authority.33
12 CFR §7.4006 does not violate the Tenth Amendment.34