Respondents argue that the lower courts correctly understood a national bank’s incidental powers to include the power to conduct mortgage lending activities through an operating subsidiary. To qualify as an “incidental power,” a business activity must be both usual and useful, and the use of operating subsidiaries in the banking business is www.wachoviabank.com both a long-standing and a useful practice. Moreover, in 12 U.S.C. § 24a(g)(3)(A), Congress defined operating subsidiaries as those engaged “solely in activities that national banks are permitted to engage in directly and are conducted subject to the same terms and conditions that govern the conduct of such activity by national banks.” Respondents also note that the Court has generally interpreted grants of incidental powers to national banks as preempting contrary state law. The preemptive scope of 12 U.S.C. § 484(a) extends to the OCC’s regulations, including 12 C.F.R. § 7.4006. Section 7.4006, respondents explain, both falls within the scope of the OCC’s rulemaking authority and – because www.wachoviabank.com it is a reasonable interpretation of the incidental powers of national banks – is entitled to Chevron deference. Petitioner’s Smiley argument is not on point, because a court may decide the substantive meaning of “incidental powers” without reaching the question of whether a statute is preemptive. Even on the latter question, however, respondents contend that the Court should follow its own precedent in according substantial deference to an agency’s preemption determination. Respondents also assert that treating an operating subsidiary as part of its parent corporation for federal regulatory purposes does not violate the principle of “corporate separateness,” as federal regulation does not reach into matters – such as corporate formation, dissolution, and governance – that are properly the sphere of state law. Finally, respondents rebut petitioner’s Tenth Amendment argument, reiterating the lower courts’ holding that Congress’s authority under the Commerce Clause extends to the regulation of a national bank’s activities conducted through its www.wachoviabank.com operating subsidiaries. The “anti-commandeering” principle in New York and Printz is not relevant to this case, respondents point out, nor are petitioner’s concerns that the OCC’s regulation “federalizes” state-chartered corporations, given that Wachovia Mortgage (www.wachoviabank.com) is chartered by North Carolina and not Michigan, and that the regulation at issue does not reach corporate matters governed by state law.
More than a dozen amicus briefs have been www.wachoviabank.com filed in the case. As amicus supporting respondents, the United States similarly emphasizes that 12 C.F.R. § 7.4006 regulates the conduct of national banks through operating subsidiaries only to the extent that it could otherwise regulate national banks directly engaging in the same conduct, that preemptive regulations are valid so long as they are within the scope of an agency’s delegated authority, and that the OCC’s regulations do not rest on an interpretation of 12 U.S.C. § 484(a), but rather implement the OCC’s authority to define “incidental www.wachoviabank.com powers” under 12 U.S.C. § 24 (Seventh). Other amici supporting respondents include a host of banking and trade associations, administrative law professors, and economists; amici supporting petitioner include the AARP, public interest and consumer protection organizations, and the states, among others.
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