Consumer Law

Amanda E. Quester and Kathleen E. Keest on Watters v. Wachovia

By Jeff Sovern

Amanda E. Quester of the Center for Responsible Lending and consumer advocate and writer Kathleen E. Keest have coauthored Looking Ahead after Watters v. Wachovia Bank: Challenges for the Lower Courts, Congress, and the Comptroller of the Currency, 27 Review of Banking and Financial Law, No. 187 (2008).  Here's the abstract:

The Supreme Court's recent decision in Watters v. Wachovia Bank, 127 S. Ct. 1559 (2007), shields operating subsidiaries of national banks from the reach of state banking officials. This article argues that lower courts must take care not to read more into the decision than it held or to overlook the majority's silence on key matters. The primary question on which the Court granted certiorari was whether it should defer to a federal agency's interpretation of that agency's own preemptive authority. The authors contend that the majority's evasion of this issue, combined with language from the dissent and earlier Court opinions, suggests that Chevron deference would not apply.

The article also discusses a number of key preemption and visitation issues that the Watters Court left open in interpreting the National Bank Act. Although Watters held that operating subsidiaries of national banks may use the NBA to shield themselves from state visitorial laws, the authors argue that the Court's emphasis on certain unique features of operating subsidiaries suggests that other entities should not be allowed to invoke the NBA's protections. The article also points out that Watters reiterated the established test for what substantive laws are preempted under the NBA and did not resolve what the term visitorial powers means in the NBA.

The article argues that in the wake of Watters Congress should pass legislation that rolls back the federal banking regulators' unprecedented preemption efforts. The authors also contend that the Office of the Comptroller of the Currency has an obligation to greatly step up its efforts to protect consumers.

Full post as published by CL&P Blog on October 13, 2008 (boomark / email).