CONNECTICUT TO APPEAL PREEMPTION DECISION
The state of Connecticut has asked the U.S. Supreme Court to reverse a decision by the U. S. Court of Appeals for the Second Circuit that affirmed a district court’s holding that federal law preempts state regulation of a national bank operating subsidiary to the same extent that is preempts regulation of the parent national bank. See Wachovia v. Burke, 414 F.3d 305 (2d Cir. July 11, 2005).
The lower court had concluded that the OCC regulations regarding operating subsidiaries reflect a consistent and well reasoned approach to preempting state regulation of operating subsidiaries so as to avoid interference with national banks’ exercise of their powers under 12 U.S.C. § 24 (Seventh) and their ability to use operating subsidiaries in the dynamic market of banking and real estate lending. Thus, the court held that it must defer to the OCC’s authorized and reasonable implementation of the National Bank Act and apply the operating subsidiary regulations.
The Second Circuit ruling is consistent with the one other circuit court that has addressed this issue. See Wells Fargo Bank, N.A. v Boutris, 419 F.3d 949 (9th Cir. 2005). In the absence of a split of authority, the state of Connecticut apparently is hoping that the significance of the issue alone may encourage the Court to take the case. As other circuit courts may soon take up this issue, the Court seems likely to decline the petition at this time. See Turnbaugh v. National City Bank of Indiana, 367 F. Supp. 2d 805 (D.C. Md. 2004) (on appeal); Wachovia Bank, N.A. v. Watters, 334 F. Supp. 2d (W.D. Mich. 2004) (on appeal).
- Elizabeth Anstaett and Mike Tomkies