	Background1

Watters v. Wachovia Bank involves a challenge to a regulation promulgated by the federal agency that charters and regulates national banks, the Office of the Comptroller of the Currency (OCC). Supreme Court Decision

The Supreme Court, in a 5-3 decision, ruled that NBA preempts state regulation of the mortgage lending activities of national bank operating subsidiaries. The basic premise of the opinion is that, under the NBA's real estate lending and incidental powers clauses, Congress gave national banks the power to conduct real estate lending activities in operating subsidiaries and that grants of authority to national banks generally preempt state law. In terms of the Court's analysis, the focus was on "the exercise of a national bank's powers , not its corporate structure."
In Watters v. Wachovia Bank , the Supreme Court, in a 5-3 decision, ruled that Michigan mortgage lending requirements do not apply to a state-chartered operating subsidiary of a national bank. The decision was based on the Court's interpretation of various provisions of the National Bank Act, including provisions granting national banks the power to make real estate loans; the "incidental powers" clause, under which national banks have been authorized by the Office of the Comptroller of the Currency (OCC), the regulator of national banks, to conduct banking activities in operating subsidiaries; and a provision granting the OCC exclusive "visitorial" powers over national banks. This report summarizes the rulings in the case and potential implications. This report will not be updated.