The National Bank Act governs the creation and supervision of national banks. It bestows the Office of the Comptroller of the Currency (OCC) with primary supervisory and wachoviabank enforcement power over national banks and authorizes the agency to promulgate rules and regulations to carry out its duties. Under 12 U.S.C. § 484(a), unless otherwise authorized by federal law, only the Comptroller, the courts, and Congress may exercise “visitorial powers” – i.e., examination of a bank’s activities and enforcement of compliance with applicable laws and regulations – over a national bank. Another of the Act’s provisions, 12 U.S.C. § 24 (Seventh), vests national banks with “all such incidental powers as shall be necessary to carry on the business of banking.” In 2001, the OCC promulgated 12 C.F.R. § 7.4006, which provides that “[s]tate laws apply to national bank operating subsidiaries to the same extent that those laws apply to the parent national bank.” This regulation, the focus of the questions presented in this case, thus precludes states from exercising visitorial authority not only over wachoviabank national banks, but also over the operating subsidiaries of those banks.
Petitioner Linda Watters, in her capacity as Commissioner of the Michigan Office of wachoviabank Financial and Insurance Services (OFIS), is responsible for administering and enforcing Michigan banking laws. Under Michigan law, mortgage brokers, lenders, and servicers that are subsidiaries of depository financial institutions are required to register with the OFIS if the depository financial institution does not have either a main or branch office located within the state. Wachovia Mortgage Corporation is a state-chartered nonbank operating subsidiary of Wachovia Bank, a national bank. Prior to 2003, Wachovia Mortgage had complied with Michigan’s registration requirement to engage in the business of making first mortgage loans within the state. On January 1, 2003, Wachovia Bank became a wholly owned operating subsidiary of Wachovia Bank (www.wachoviabank.com). In a letter dated April 3, 2003, Wachovia Mortgage notified OFIS that, in reliance on federal law, it would no longer be registering with OFIS. In response to wachoviabank letter, OFIS informed Wachovia Mortgage that without a registration, it would no longer be authorized to conduct mortgage lending activities in Michigan.