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Watters v. Wachovia Bank

This was an important Supreme Court case about the extent to which a federal agency — the Office of the Comptroller of the Currency (OCC) — can promulgate rules that expand its own authority to preempt the reach of state consumer protection laws. Over the past few years, the OCC has sought to immunize state-chartered operating subsidiaries of national banks from the reach of numerous state laws and law enforcement relating to predatory lending and other abuses. Public Citizen, together with a coalition of twelve non-profit public interest organizations and seventeen law professors led by the Center for Responsible Lending, joined this amicus brief. The brief argued that courts shouldn’t defer to the agency’s own self-aggrandizing interpretation of its powers, an interpretation that was not supported by statutory text or congressional policy.

Questions presented:

  1. Is the interpretation of the Comptroller of the Currency that 12 CFR 7.4006 preempts Michigan’s laws regulating mortgage lending as applied to State chartered nonbank operating subsidiaries, entitled to judicial deference under Chevron USA, Inc. v. Natural Resources Defense Council?
  2. Does 12 CFR 7.4006, by equating a State-chartered nonbank operating subsidiary with a national bank for purposes of federal preemption of State regulation, violate the Tenth Amendment to the United States Constitution?

Decided 5-3 for Respondents.