Watters, the Commissioner of the Michigan Office of Insurance and Financial Services, was sued by Wachovia Bank for a declaratory statement, claiming the National Bank Act and its regulations kept Michigan from regulating national banks. In addition Wachovia wanted an injunction to keep Michigan from halting the mortgage lending of Wachovia. Under Michigan law, Wachovia registered to make mortgage loans and became a totally owned auxiliary of the bank. On April 3 of 2003, Wachovia Mortgage counseled Michigan that it was giving up Michigan lending registration. The Commissioner, stating that they could not take part in mortgage lending in Michigan, counseled Wachovia Mortgage. A declaration was sought by Wachovia that the issue of the Michigan statute is prevented by the National Banking Act.
Under 12 U.S.C. § 484(a), national banks are not subject to both inspection and regulatory powers unless when permitted by federal law. The Office of the Comptroller of the Currency (OCC) issued 12 C.F.R. § 7.4000, which keeps states from using the inspection and regulatory powers on national banks. The OCC also made known that laws between national banks and their subsidiaries are equal under 12 C.F.R. § 7.4006. Michigan made the argument that a national bank's subsidiary, which is not a national charter, should not be defined as a national bank and keeping a state from regulating a state body is in violation of the 10th Amendment.
Wachovia's motion was granted by the district court and was affirmed by the U.S. Court of Appeals for the 6th Circuit. When looking at the Wachovia case, the 6th Circuit used the Chevron U.S.A., Inc. v. Natural Resources Defense Council to apply their ruling. In this case, the courts had to defer to administrative agencies unless their exploits are different to the statute allowing their power or are not sound interpretations of the statute. The findings of the court, even though the statute said nothing on the issue, was that the reading of the OCC was viable considering the power the OCC had to solely regulate banks and to also regulate powers secondary to banking. The 10th Amendment also did not apply since the National Bank Act was a suitable use of the Congress's Commerce Clause power and only un-enumerated powers are protected by the 10th Amendment.
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