Petitioner Security Pacific National Bank (Security Pacific)
applied to the Comptroller of the Currency for permission to
establish an affiliate named Discount Brokerage, and to offer
discount brokerage services not only at its branch offices but also
at other locations inside and outside of its home State. A
pertinent branching provision of the National Bank Act, 12 U.S.C. §
81, originally enacted in 1927 as part of the McFadden Act, limits
"the general business" of a national bank to its headquarters and
any "branches" permitted by 12 U.S.C. § 36. Section 36(c) provides
that a national bank is permitted to branch only in its home State,
and only to the extent that a bank of the same State is permitted
to branch under state law, and the term "branch" is defined in §
36(f)
"to include any branch bank, branch office, branch agency,
additional office or any branch place of business . . . at which
deposits are received, or checks paid, or money lent."
The Comptroller approved Security Pacific's application,
concluding that the nonchartered offices at which Discount
Brokerage would offer its services would not constitute branches
under the McFadden Act because none of the statutory branching
functions set forth in § 36(f) would be performed there, and that
treating offices conducting brokerage activities as branches under
§ 36(f) would be inconsistent with the longstanding practice of
banks in operating nonbranch offices dealing in United States
Government or municipal securities. Respondent, a trade association
representing securities brokers, underwriters, and investment
bankers, brought suit in Federal District Court, contending that
bank discount brokerage offices are branches within the meaning of
§ 36(f), and thus are subject to the geographical restrictions
imposed by § 36(c). The court, relying on
Association of Data
Processing Service Organizations, Inc. v. Camp, 397 U.
S. 150, rejected the Comptroller's contention that
respondent lacked standing to maintain the action, and ruled for
respondent on the merits. The Court of Appeals affirmed.
Page 479 U. S. 389
Held:
1. Respondent has standing to maintain this lawsuit. Under the
"standing" standard set forth in
Association of Data Processing
Service Organizations, supra, at 153, the complainant must be
injured in fact, and the interest sought to be protected by the
complainant must be arguably within the "zone of interests" to be
protected or regulated by the statute in question. The essential
inquiry in determining standing is whether Congress intended for a
particular class of plaintiffs to be relied upon to challenge an
agency's disregard of the law.
Cf. Block v. Community Nutrition
Institute, 467 U. S. 340,
467 U. S. 347.
The "zone of interest" test provides standing in this case, since
the interest respondent asserts has a plausible relationship to the
policies underlying §§ 36 and 81 with regard to Congress' concern
to keep national banks from gaining a monopoly control over credit
and money through unlimited branching. Pp.
479 U. S.
394-403.
2. The Comptroller, whose construction of the statutory
provisions is entitled to great weight, did not exceed his
authority in approving Security Pacific's application. There is no
merit to respondent's contention that the Comptroller's
interpretation of the National Bank Act contradicts the plain
language of the statute. The phrase "[t]he general business of each
national banking association" in § 81 need not be read to encompass
all the business in which a bank engages, but, as interpreted by
the Comptroller, can plausibly be read as covering only those
activities that are part of the bank's core banking functions. The
Act's history, including that predating the branching provisions of
the McFadden Act, supports the Comptroller's interpretation. The
history of the McFadden Act itself does not establish that Congress
intended the locational restriction of §§ 81 and 36 to reach all
activities in which national banks are specifically authorized to
engage. The Comptroller reasonably interprets § 36(f) as requiring
"competitive equality" between state and national banks only in
core banking functions, and the operation of a discount brokerage
service is not such a function. Pp.
479 U. S.
403-409.
244 U.S.App.D.C. 419, 758 F.2d 739, and 247 U.S.App.D.C. 42, 765
F.2d 1196, affirmed in part and reversed in part.
WHITE, J., delivered the opinion of the Court, in which BRENNAN,
MARSHALL, BLACKMUN, and POWELL, JJ., joined, and in Parts I and III
of which REHNQUIST, C. J., and STEVENS and O'cONNOR, JJ., joined.
STEVENS, J., filed an opinion concurring in part and concurring in
the judgment, in which REHNQUIST, C.J., and O'CONNOR, J., joined,
post, p.
479 U. S. 409.
SCALIA, J., took no part in the consideration or decision of the
cases.
Page 479 U. S. 390
JUSTICE WHITE delivered the opinion of the Court.
In these cases, we review an application of the so-called "zone
of interest" standing test that was first articulated in
Association of Data Processing Service Organizations, Inc. v.
Camp, 397 U. S. 150
(1970). Concluding that respondent is a proper litigant, we also
review, and reverse, a judgment that the Comptroller of the
Currency exceeded his authority in approving the applications of
two national banks for the establishment or purchase of discount
brokerage subsidiaries.
I
In 1982, two national banks, Union Planters National Bank of
Memphis (Union Planters) and petitioner Security Pacific National
Bank of Los Angeles (Security Pacific), applied to the Comptroller
of the Currency for permission to open offices that would offer
discount brokerage services to the public. [
Footnote 1]
Page 479 U. S. 391
Union Planters proposed to acquire an existing discount
brokerage operation, and Security Pacific sought to establish an
affiliate named Discount Brokerage. Both banks proposed to offer
discount brokerage services not only at their branch offices but
also at other locations inside and outside of their home
States.
In passing on Security Pacific's application, the Comptroller
was faced with the question whether the operation of Discount
Brokerage would violate the National Bank Act's branching
provisions. Those limitations, enacted as §§ 7 and 8 of the
McFadden Act, 44 Stat. 1228,
as amended, are codified at
12 U.S.C. § 36 and 12 U.S.C. § 81. Section 81 limits "the general
business" of a national bank to its headquarters and any "branches"
permitted by § 36. Section 36(c) provides that a national bank is
permitted to branch only in its home State, and only to the extent
that a bank of the same State is permitted to branch under state
law. The term "branch" is defined at 12 U.S.C. § 36(f)
"to include any branch bank, branch office, branch agency,
additional office, or any branch place of business . . . at which
deposits are received, or checks paid, or money lent."
The Comptroller concluded that
"the non-chartered offices at which Discount Brokerage will
offer its services will not constitute branches under the McFadden
Act because none of the statutory branching functions will be
performed there."
App. D to Pet. for Cert. in No. 85-971, p. 39a. He explained
that, although Discount Brokerage would serve as an intermediary
for margin lending, loan approval would take place at chartered
Security Pacific offices, so that Discount Brokerage offices would
not be lending money within the meaning of § 36(f). Likewise,
although Discount Brokerage
Page 479 U. S. 392
would maintain, and pay interest on, customer balances created
as an incident of its brokerage business, the Comptroller concluded
that these accounts differ sufficiently in nature from ordinary
bank accounts that Discount Brokerage would not be engaged in
receiving deposits. [
Footnote
2] He further observed that treating offices conducting
brokerage activities as branches under § 36(f) would be
inconsistent with the "longstanding and widespread" practice of
banks' operating nonbranch offices dealing in United States
Government or municipal securities.
Id. at 44a.
Accordingly, the Comptroller approved Security Pacific's
application. [
Footnote 3]
Respondent, a trade association representing securities brokers,
underwriters, and investment bankers, brought this action in the
United States District Court for the District of Columbia. Among
other things, respondent contended that bank discount brokerage
offices are branches within the meaning of § 36(f), and thus are
subject to the geographical
Page 479 U. S. 393
restrictions imposed by § 36(c). [
Footnote 4] The Comptroller disputed this position on the
merits, and also argued that respondent lacks standing because it
is not within the zone of interests protected by the McFadden Act.
[
Footnote 5] The Comptroller
contended that Congress passed the McFadden Act not to protect
securities dealers, but to establish competitive equality between
state and national banks.
The District Court, relying on
Association of Data
Processing Service Organizations, Inc. v. Camp, 397 U.
S. 150 (1970), held that respondent has standing and
rejected the Comptroller's submission that national banks may offer
discount brokerage services at nonbranch locations. A divided panel
of the Court of Appeals affirmed in a brief per curiam opinion,
[
Footnote 6] 244 U.S.App.D.C.
419, 758 F.2d 739 (1985), and rehearing en banc was denied, with
three judges dissenting. 247 U.S.App.D.C. 42, 765 F.2d 1196
(1985).
Page 479 U. S. 394
The Comptroller sought review by petition for certiorari, as did
Security Pacific. We granted both petitions, and consolidated the
cases. 475 U.S. 1044 (1986). We now affirm the judgment that
respondent has standing, but reverse on the merits.
II
In
Association of Data Processing Service Organizations,
Inc. v. Camp, supra, the association challenged a ruling by
the Comptroller allowing national banks, as part of their
incidental powers under 12 U.S.C. § 24 Seventh, to make data
processing services available to other banks and to bank customers.
There was no serious question that the data processors had
sustained an injury in fact by virtue of the Comptroller's action.
Rather, the question, which the Court described as one of standing,
was whether the data processors should be heard to complain of that
injury. The matter was basically one of interpreting congressional
intent, [
Footnote 7] and the
Court looked to § 10 of the Administrative Procedure Act (APA), 5
U.S.C. § 702, which "grants standing to a person
aggrieved by
agency action within the meaning of a relevant statute.'" 397 U.S.
at 397 U. S. 153.
The Court of Appeals had interpreted § 702 as requiring either the
showing of a "legal interest," as that term had been narrowly
construed in our earlier cases, e.g., Tennessee Electric Power
Co. v. TVA, 306 U. S. 118,
306 U. S. 137
(1939), or alternatively as requiring an explicit provision in the
relevant statute permitting suit by any party "adversely affected
or aggrieved." [Footnote 8]
See Association of Data Processing Service Organizations, Inc.
v. Camp, 406
Page 479 U. S. 395
F.2d 837 (CA8 1969). This Court was unwilling to take so narrow
a view of the APA's "`generous review provisions,'" 397 U.S. at
397 U. S. 156
(quoting
Shaughnessy v. Pedreiro, 349 U. S.
48,
349 U. S. 51
(1955)), and stated that, in accordance with previous decisions,
the Act should be construed "not grudgingly, but as serving a
broadly remedial purpose,"
ibid. (citing
Shaughnessy,
supra, and
Rusk v. Cort, 369 U.
S. 367,
369 U. S.
379-380 (1962)). Accordingly, the data processors could
be "within that class of `aggrieved' persons who, under § 702, are
entitled to judicial review of `agency action,'" 397 U.S. at
397 U. S. 157,
even though the National Bank Act itself has no reference to
aggrieved persons, and, for that matter, no review provision
whatsoever. [
Footnote 9] It was
thought, however, that Congress, in enacting § 702, had not
intended to allow suit by every person suffering injury in fact.
What was needed was a gloss on the meaning of § 702. The Court
supplied this gloss by adding to the requirement that the
complainant be "adversely affected or aggrieved,"
i.e.,
injured in fact, the
Page 479 U. S. 396
additional requirement that
"the interest sought to be protected by the complainant [be]
arguably within the zone of interests to be protected or regulated
by the statute or constitutional guarantee in question."
Id. at 153.
The Court concluded that the data processors were arguably
within the zone of interests established by § 4 of the Bank
Page 479 U. S. 397
Service Corporation Act of 1962, 76 Stat. 1132, 12 U.S.C. §
1864, which forbids bank service corporations to "engage in any
activity other than the performance of bank services for banks."
See 397 U.S. at
397 U. S. 155.
In so holding, the Court relied on a brief excerpt from the
legislative history of § 4 indicating that Congress intended to
enforce adherence to "the accepted public policy which strictly
limits banks to banking."
Ibid. (internal quotations
omitted). [
Footnote 10] The
data processors were therefore permitted to litigate the validity
of the Comptroller's ruling.
The "zone of interest" formula in
Data Processing has
not proved self-explanatory, [
Footnote 11] but significant guidance can nonetheless be
drawn from that opinion.
First. The Court interpreted the
phrase "a relevant statute" in § 702 broadly; the data processors
were alleging violations of 12 U.S.C. § 24 Seventh,
see
397 U.S. at
397 U. S. 157,
n. 2, yet the Court relied on the legislative history of a much
later statute, § 4 of the Bank Service Corporation Act of 1962, in
holding that the data processors satisfied the "zone of interest"
test.
Second. The Court approved the "trend . . . toward
[the] enlargement of the class of people who may protest
administrative action." 397 U.S. at
397 U. S. 154.
At the same time, the Court implicitly recognized the potential for
disruption inherent in allowing every party adversely affected by
agency action to seek judicial review. The Court struck the balance
in a manner favoring review, but excluding those would-be
plaintiffs not even "arguably within the zone of interests to be
protected or regulated by the statute. . . ."
Id. at
397 U. S. 153.
[
Footnote 12]
The reach of the "zone of interest" test, insofar as the class
of potential plaintiffs is concerned, is demonstrated by the
subsequent decision in
Investment Company Institute v.
Camp, 401 U. S. 617
(1971). There, an association of open-end investment companies and
several individual investment companies sought, among other things,
review of a Comptroller's regulation that authorized banks to
operate collective investment funds. The companies alleged that the
regulation violated the Glass-Steagall Banking Act of 1933, which
prohibits banks from underwriting or issuing securities.
See 12 U.S.C. § 24 Seventh. The Comptroller urged that the
plaintiffs lacked standing, to which the Court responded that
plaintiffs not only suffered actual injury but, as in
Data
Processing, suffered injury from the competition that Congress
had arguably legislated against by limiting the activities
available to national banks. [
Footnote 13]
Page 479 U. S. 398
Justice Harlan, in dissent, complained that there was no
evidence that Congress had intended to benefit the plaintiff's
class when it limited the activities permitted national banks. The
Court did not take issue with this observation; it was enough to
provide standing that Congress, for its own reasons, primarily its
concern for the soundness of the banking system, had forbidden
banks to compete with plaintiffs by entering the investment company
business.
Page 479 U. S. 399
Our decision in
Block v. Community Nutrition Institute,
467 U. S. 340
(1984), provides a useful reference point for understanding the
"zone of interest" test. There we held that, while milk handlers
have the right to seek judicial review of pricing orders issued by
the Secretary of Agriculture under the Agricultural Marketing
Agreement Act of 1937, consumers have no such right, because
"[a]llowing consumers to sue the Secretary would severely disrupt
[the] complex and delicate administrative scheme."
Id. at
467 U. S. 348.
We recognized the presumption in favor of judicial review of agency
action, but held that this presumption is "overcome whenever the
congressional intent to preclude judicial review is
fairly
discernible in the statutory scheme.'" Id. at 467 U. S. 351
(quoting Data Processing, 397 U.S. at 397 U. S.
157). The essential inquiry is whether Congress
"intended for [a particular] class [of plaintiffs] to be relied
upon to challenge agency disregard of the law." 467 U.S. at
467 U. S. 347
(citing Barlow v. Collins, 397 U.
S. 159, 397 U. S. 167
(1970)).
The "zone of interest" test is a guide for deciding whether, in
view of Congress' evident intent to make agency action
presumptively reviewable, a particular plaintiff should be heard to
complain of a particular agency decision. In cases where the
plaintiff is not itself the subject of the contested regulatory
action, the test denies a right of review if the plaintiff's
interests are so marginally related to or inconsistent with the
purposes implicit in the statute that it cannot reasonably be
assumed that Congress intended to permit the suit. The test is not
meant to be especially demanding; [
Footnote 14] in particular, there need be no indication
of congressional purpose
Page 479 U. S. 400
to benefit the would-be plaintiff.
Investment Company
Institute v. Camp, 401 U. S. 617
(1971). [
Footnote 15]
The inquiry into reviewability does not end with the "zone of
interest" test. In
Community Nutrition Institute, the
interests of consumers were arguably within the zone of interests
meant to be protected by the Act,
see 467 U.S. at
467 U. S. 347,
but the Court found that point not dispositive because, at bottom,
the reviewability question turns on congressional intent, and all
indicators helpful in discerning that intent must be weighed.
[
Footnote 16]
Page 479 U. S. 401
In considering whether the "zone of interest" test provides or
denies standing in these cases, we first observe that the
Comptroller's argument focuses too narrowly on 12 U.S.C. § 36, and
does not adequately place § 36 in the overall context of the
National Bank Act. As
Data Processing demonstrates, we are
not limited to considering the statute under which respondents
sued, but may consider any provision that helps us to understand
Congress' overall purposes in the National Bank Act.
See
supra at
479 U. S.
396.
Section 36 is a limited exception to the otherwise applicable
requirement of § 81 that "the general business of each national
banking association shall be transacted in the place specified in
its organization certificate. . . ." Prior to the enactment of §
36, § 81 had been construed to prevent branching by national banks.
Lowry National Bank, 29 Op.Atty.Gen. 81 (1911), approved
in
First National Bank in St. Louis v. Missouri,
263 U. S. 640,
263 U. S.
656-659 (1924). We have described the circumstances
surrounding the enactment of § 36 as part of the McFadden Act, and
its subsequent modification by the amendments added through the
Bank Act of 1933, in
First National Bank of Logan v. Walker
Bank & Trust Co., 385 U. S. 252
(1966), and we will not repeat that history in
Page 479 U. S. 402
detail here. It is significant for our present inquiry that
Congress rejected attempts to allow national banks to branch
without regard to state law.
See id. at
385 U. S. 259.
There were many expressions of concern about the effects of
branching among those who supported the McFadden Act, as well as
among its opponents. Allusion was made to the danger that national
banks might obtain monopoly control over credit and money if
permitted to branch. 66 Cong.Rec. 4438 (1925) (remarks of Sen.
Reed). The sponsor of the Act himself stated that "[t]his bill is
much more an anti-branch-banking bill than a branch-banking bill."
Id. at 1582 (remarks of Rep. McFadden). [
Footnote 17] In short, Congress was
concerned not only with equalizing the status of state and federal
banks, but also with preventing the perceived dangers of unlimited
branching.
Page 479 U. S. 403
The interest respondent asserts has a plausible relationship to
the policies underlying §§ 36 and 81 of the National Bank Act.
Congress has shown a concern to keep national banks from gaining a
monopoly control over credit and money through unlimited branching.
Respondent's members compete with banks in providing discount
brokerage services -- activities which give banks access to more
money, in the form of credit balances, and enhanced opportunities
to lend money,
viz., for margin purchases. "Congress [has]
arguably legislated against the competition that [respondent seeks]
to challenge,"
Investment Company Institute, 401 U.S. at
401 U. S. 620,
by limiting the extent to which banks can engage in the discount
brokerage business, and hence limiting the competitive impact on
nonbank discount brokerage houses.
These cases can be analogized to
Data Processing and
Investment Company Institute. In those cases the question
was what activities banks could engage in at all; here, the
question is what activities banks can engage in without regard to
the limitations imposed by state branching law. In both cases,
competitors who allege an injury that implicates the policies of
the National Bank Act are very reasonable candidates to seek review
of the Comptroller's rulings. There is sound reason to infer that
Congress "intended [petitioner's] class [of plaintiffs] to be
relied upon to challenge agency disregard of the law."
Community Nutrition Institute, 467 U.S. at
467 U. S. 347.
And we see no indications of the kind presented in
Community
Nutrition Institute that make "fairly discernible" a
congressional intent to preclude review at respondent's behest. We
conclude, therefore, that respondent was a proper party to bring
this lawsuit, and we now turn to the merits.
III
"It is settled that courts should give great weight to any
reasonable construction of a regulatory statute adopted by the
agency charged with
Page 479 U. S. 404
the enforcement of that statute. The Comptroller of the Currency
is charged with enforcement of banking laws to an extent that
warrants the invocation of this principle with respect to his
deliberative conclusions as to the meaning of these laws.
See
First National Bank v. Missouri, 263 U. S.
640,
263 U. S. 658."
Investment Company Institute v. Camp, supra, at
401 U. S.
626-627.
See also, e.g., United States v. Riverside
Bayview Homes, Inc., 474 U. S. 121
(1985);
Chemical Manufacturers Assn. v. Natural Resources
Defense Council, Inc., 470 U. S. 116
(1985);
Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837
(1984).
Respondent contends that the Comptroller's interpretation of the
Bank Act is not entitled to deference, because it contradicts the
plain language of the statute. Respondent relies on 12 U.S.C. § 81,
which provides:
"The general business of each national banking association shall
be transacted in the place specified in its organization
certificate and in the branch or branches, if any, established or
maintained by it in accordance with the provisions of section 36 of
this title."
In respondent's view, the unambiguous meaning of § 81 is that
"national banks may locate their business only at their
headquarters or licensed branches within the same state." Brief for
Respondent 11. However, § 81 is considerably more ambiguous than
respondent allows. The phrase "[t]he general business of each
national banking association" in § 81 need not be read to encompass
all the business in which the bank engages, but, as we shall
explain, can plausibly be read to cover only those activities that
are part of the bank's core banking functions.
Prior to 1927, the predecessor of § 81 (Rev. Stat. § 5190)
provided that
"the usual business of each national banking association shall
be transacted at an office or banking-house located in the place
specified in its organization certificate."
In
Lowry National Bank, 29 Op.Atty.Gen. 81 (1911),
the
Page 479 U. S. 405
Attorney General interpreted this statute to permit
"a bank [to] maintain an [extra-office] agency, the power of
which is restricted to dealing in bills of exchange, or possibly to
some other particular class of business incident to the banking
business,"
but to forbid "a bank to establish a branch for the transaction
of a general banking business."
Id. at 86. The Attorney
General went on to cite cases which he viewed as
"recogniz[ing] a vital distinction between a mere agency for the
transaction of a particular business and a branch bank wherein is
carried on a general banking business."
Id. at 87. He summarized the distinction as
follows:
"An agency requires no division of the capital stock, and the
details of the business are few and are easily supervised by the
officers of the bank, while a branch bank requires, in effect, a
division of the capital, the working force is organized, and the
business conducted as if it were a separate organization, and it
competes in all branches of the banking business with other banks
in that locality the same as if it were an independent
institution."
Id. at 87-88. The Court subsequently approved this
interpretation of § 5190 in
First National Bank in St. Louis v.
Missouri, 263 U.S. at
263 U. S. 658.
The
Lowry National Bank opinion, which is part of the
background against which Congress legislated when it passed the
McFadden Act in 1927, does not interpret § 5190 as requiring
national banks to conduct all of their business at the central
office. The opinion equates "the usual business of banking" with "a
general banking business," and envisions branching in terms of the
performance of core banking functions.
Respondent attempts to sidestep the
Lowry opinion by
arguing that Congress changed the meaning of § 5190 when, in
passing the McFadden Act, it changed the words "the usual business
of each national banking association" to "the general business of
each national banking association." Respondent
Page 479 U. S. 406
has pointed to nothing in the legislative history of the
McFadden Act, however, indicating that this change in the wording
had substantive significance. We find reasonable the Comptroller's
position that "the amendment simply codified the accepted notion
that the
usual business' of a bank was the `general banking
business.'" Reply Brief for Federal Petitioner 5, n. 5.
Respondent's fallback position from its "plain language"
argument is that the phrase "general business" in § 81 at least
refers to all activities in which Congress has specifically
authorized a national bank to engage, including the trading in
securities that the McFadden Act authorized by the amendment of 12
U.S.C. § 24 Seventh.
See McFadden Act, ch. 191, § 2, 44
Stat. 1226. However, petitioner Security Pacific has provided a
counter-example to this general thesis: In § 2(b) of the McFadden
Act, Congress specifically authorized national banks' involvement
in the safe-deposit business, and in doing so deleted language from
the bill that arguably would have limited the bank's authority "to
conduct a safe deposit business" to activities "located on or
adjacent to the premises of such association." 67 Cong.Rec. 3231
(1926). In floor debates, Representative McFadden, in response to
the question from Representative Celler whether the bill, as
amended, would permit "a safe-deposit business [to be] conducted a
block away or a mile away from a national banking association,"
replied that the deletion of the language regarding location
"removes the limitations which might be very embarrassing to an
institution."
Id. at 3232. [
Footnote 18] In view of this exchange, we are not
persuaded that Congress intended the locational restriction of § 81
and § 36 to reach all activities in which national banks are
specifically authorized to engage.
Page 479 U. S. 407
Respondent also relies on the following statement, which
Representative McFadden placed in the Congressional Record 10 days
after the passage of the McFadden Act, while Congress was in
recess:
"[Section 36(f)] defines the term 'branch.' Any place outside of
or away from the main office where the bank carries on its business
of receiving deposits, paying checks, lending money, or transacting
any business carried on at the main office, is a branch if it is
legally established under the provisions of this act."
68 Cong.Rec. 5816 (1927). We do not attach substantial weight to
this statement, which Congress did not have before it in passing
the McFadden Act. As the Comptroller persuasively argues,
Representative McFadden cannot be considered an impartial
interpreter of the bill that bears his name, since he was not
favorably disposed toward branch banking. [
Footnote 19] If we took literally Representative
McFadden's view of § 36(f), we would have to conclude that Congress
intended to overturn the Attorney General's opinion in
Lowry
National Bank, 29 Op.Atty.Gen. 81 (1911), which this Court had
previously approved in
First National Bank in St. Louis v.
Missouri, supra, at
263 U. S. 658.
Congress never specifically indicated such an intention, and we
find it hard to imagine that it would have made such a change
without comment.
It is significant that, in passing the McFadden Act, Congress
recognized and for the first time specifically authorized the
practice of national banks' engaging in the buying and selling of
investment securities.
See Act of Feb. 25, 1927, ch. 191,
§ 2, 44 Stat. 1226. [
Footnote
20] Prior to 1927, banks had conducted
Page 479 U. S. 408
such securities transactions on a widespread and often
interstate basis, without regard to the locational restriction
imposed by § 5190 on "the usual business of each national banking
association."
See, e.g., W. Peach, The Security Affiliates
of National Banks 74 (1941); Perkins, The Divorce of Commercial and
Investment Banking: A History, 88 Banking L.J. 483, 492, 494, n. 26
(1971). [
Footnote 21] We
find it unlikely that Congress, in recognizing and explicitly
authorizing this practice, would have undertaken to limit its
geographic scope through the branching law without specifically
noting the restriction on the prior practice. [
Footnote 22]
Page 479 U. S. 409
For the foregoing reasons, we conclude that Congress did not
intend to subject a bank's conduct of a securities business to the
branching restrictions imposed by 12 U.S.C. § 36(f). We do not view
our decision today as inconsistent with our prior decisions
interpreting 12 U.S.C. § 36(f) as embodying a policy of
"competitive equality" between state and national banks.
See,
e.g., First National Bank in Plant City v. Dickinson,
396 U. S. 122
(1969). The Comptroller reasonably interprets the statute as
requiring "competitive equality" only in core banking functions,
and not in all incidental services in which national banks are
authorized to engage. [
Footnote
23] We are not faced today with the need to decide whether
there are core banking functions beyond those explicitly enumerated
in § 36(f); it suffices, to decide this case, to hold that the
operation of a discount brokerage service is not a core banking
function.
Accordingly, the judgment of the Court of Appeals is affirmed
insofar as it held that respondent has standing, and reversed on
the merits.
It is so ordered.
JUSTICE SCALIA took no part in the consideration or decision of
these cases.
[
Footnote 1]
Discount brokers execute trades on behalf of their customers,
but do not offer investment advice. As a result, the commissions
they charge are substantially lower than those charged by
full-service brokers.
See Securities Industries Assn. v. Board
of Governors, FRS, 468 U. S. 207,
468 U. S. 209,
n. 2 (1984).
[
Footnote 2]
The Comptroller relied primarily on the fact that banks publicly
solicit deposits and use deposited funds in lending, while credit
balances maintained by brokers are not, as such, directly solicited
from the public, and are subject to regulatory restrictions
regarding use by brokers. See the Securities Investor Protection
Act, 16 U.S.C. § 78aaa
et seq. (restricting advertising,
promotional, and selling practices of brokers regarding
interest-bearing free credit balances); 17 CFR § 240.15c3-2 (1986)
(regulating the use of credit balances by brokers).
Although the Comptroller believed that § 36(f) should be read
narrowly to define "branch" only with reference to receiving
deposits, making loans, and cashing checks, he recognized that
there is authority supporting a broader reading. In
St. Louis
County National Bank v. Mercantile Trust Company National
Assn., 548 F.2d 716 (CA8 1976),
cert. denied, 433
U.S. 909 (1977), a trust office operated by a national bank was
held to be a branch. While disagreeing with this holding, the
Comptroller took the position that it "should at the very least be
limited to those dealings with the public requiring a specialized
banking or similar license." App. D to Pet. for Cert. in No.
85-971, pp. 43a-44a.
[
Footnote 3]
A month later, the Comptroller approved without comment the
application of Union Planters to acquire an existing brokerage
firm. App. E to Pet. for Cert. in No. 85-971, p. 47a.
[
Footnote 4]
Respondent also contended that national banks are entirely
prohibited from offering discount brokerage services by the
Glass-Steagall Act, 12 U.S.C. § 24 (1982 ed. and Supp. 1II); 12
U.S.C. §§ 78, 377, 378. This contention was rejected by the
District Court, a holding that is not before us.
[
Footnote 5]
The Comptroller also argued unsuccessfully that respondent could
show no injury, and thus had not presented the court with a "case
or controversy" within the meaning of Article III. The Comptroller
has since abandoned this argument.
[
Footnote 6]
The dissenting judge argued that there was no standing, as he
did in dissenting, with two other judges, from the denial of en
banc rehearing. In his view, the purpose of the McFadden Act is to
establish competitive equality between national and state banks as
regards branching, and, while
"state banks (and state banking commissions) are obviously
within the zone of interests protected by the statute, . . . the
brokerage houses suing in the present case are no more within it
than are businesses competing for the parking spaces that an
unlawful branch may occupy."
247 U.S.App.D.C. at 43, 765 F.2d at 1197. The dissenter also
argued that the indefinite language of § 36(f) "presents precisely
the situation in which our deference to the agency should be at its
height"
id. at 44, 765 F.2d at 1198, and concluded that
the Comptroller's construction of the statute "cannot by any means
be considered unreasonable," and therefore should be affirmed if
respondent is held to have standing.
Ibid.
[
Footnote 7]
"Congress can, of course, resolve the question [of standing] one
way or another, save as the requirements of Article III dictate
otherwise." 397 U.S. at
397 U. S.
164.
[
Footnote 8]
Section 402(b) of the Communications Act of 1934,
as
amended, 47 U.S.C. § 402(b), is an example of a statute
granting an explicit right of review to all persons adversely
affected or aggrieved by particular agency actions (there,
licensing actions by the Federal Communications Commission).
See generally FCC v. Sanders Bros. Radio Station,
309 U. S. 470
(1940).
[
Footnote 9]
We have most recently reaffirmed this liberal reading of the
review provisions of the APA in
Japan Whaling Assn. v. American
Cetacean Society, 478 U. S. 221
(1986). There, the Cetacean Society sought judicial review of the
Secretary of Commerce's refusal to carry out his alleged duty,
under the Pelly Amendment to the Fishermen's Protective Act of
1967, to certify Japan for taking actions that diminished the
effectiveness of the International Convention for the Regulation of
Whaling. The Secretary contended, among other things, that the
Cetacean Society had no private cause of action under the Pelly
Amendment. We rejected this argument, holding that respondents had
a right of action
"expressly created by the Administrative Procedure Act (APA),
which states that 'final agency action for which there is no other
adequate remedy in a court [is] subject to judicial review,' § 704,
at the behest of '[a] person . . . adversely affected or aggrieved
by agency action.'"
Id. at
478 U. S. 231,
n. 4. We held further, with citations to such previous decisions as
Block v. Community Nutrition Institute, 467 U.
S. 340 (1984), that
"[a] separate indication of congressional intent to make agency
action reviewable under the APA is not necessary; instead, the rule
is that the cause of action for review of such action is available,
absent some clear and convincing evidence of legislative intention
to preclude review."
Japan Whaling, supra, at
478 U. S. 231,
n. 4.
[
Footnote 10]
Subsequently, in
Arnold Tours, Inc. v. Camp,
400 U. S. 45
(1970), the Court held that, under the rationale of
Data
Processing, travel agents have standing to challenge the
Comptroller's decision to allow banks, pursuant to their incidental
powers under 12 U.S.C. § 24 Seventh, to provide travel services to
their customers. The Court found it of no moment that Congress
never specifically focused on the interests of travel agents in
enacting § 4 of the Bank Service Corporation Act. 400 U.S. at
400 U. S. 46,
and n. 3.
[
Footnote 11]
The zone test has also been the subject of considerable
scholarly writing, much of it critical.
See, e.g., 4 K.
Davis, Administrative Law Treatise § 24:17 (2d ed. 1983); Stewart,
The Reformation of American Administrative Law, 88 Harv. L. Rev.
1667, 1731-1734 (1975); Albert, Standing to Challenge
Administrative Action: An Inadequate Surrogate for Claim for
Relief, 83 Yale L.J. 425 (1974); Scott, Standing in the Supreme
Court -- A Functional Analysis, 86 Harv.L.Rev. 645 (1973); Jaffe,
Standing Again, 84 Harv.L.Rev. 633, 634, and n. 9 (1971).
[
Footnote 12]
The Court's concern was to ensure that the data processors'
association would be "a reliable private attorney general to
litigate the issues of the public interest in the present case."
397 U.S. at
397 U. S. 154.
The language quoted is directed most immediately to the inquiry
whether sufficient concrete adversity existed in the case to
satisfy Article III. However, the concern that the plaintiff be
"reliable" carries over to the "zone of interest" inquiry, which
seeks to exclude those plaintiffs whose suits are more likely to
frustrate than to further statutory objectives.
[
Footnote 13]
The Court stated:
"This contention [that plaintiffs lack standing] is foreclosed
by
Data Processing Service v. Camp, 397 U. S.
150. There we held that companies that offered data
processing services to the general business community had standing
to seek judicial review of a ruling by the Comptroller that
national banks could make data processing services available to
other banks and to bank customers. We held that data processing
companies were sufficiently injured by the competition that the
Comptroller had authorized to create a case or controversy. The
injury to the petitioners in the instant case is indistinguishable.
We also concluded that Congress did not intend 'to preclude
judicial review of administrative rulings by the Comptroller as to
the legitimate scope of activities available to national banks
under [the National Bank Act].' 397 U.S. at
397 U. S.
167. This is precisely the review that the petitioners
have sought in this case. Finally, we concluded that Congress had
arguably legislated against the competition that the petitioners
sought to challenge, and from which flowed their injury. We noted
that, whether Congress had indeed prohibited such competition was a
question for the merits. In the discussion that follows in the
balance of this opinion, we deal with the merits of petitioners'
contentions, and conclude that Congress did legislate against the
competition that the petitioners challenge. There can be no real
question, therefore, of the petitioners' standing in the light of
the
Data Processing case.
See also Arnold Tours v.
Camp, 400 U. S. 45."
401 U.S. at
401 U. S.
620-621. In the discussion of the merits that followed,
the Court interpreted the Glass-Steagall Act as reflecting
"a [congressional] determination that policies of competition,
convenience, or expertise which might otherwise support the entry
of commercial banks into the investment banking business were
outweighed by the 'hazards' and 'financial dangers' that arise when
commercial banks engage in the activities proscribed by the
Act."
Id. at
401 U. S. 630
(footnote omitted). The Court described these "hazards" primarily
in terms of the danger to banks of making imprudent investments or
risky loans, as well as the dangers of possible loss of public
confidence in banks and the danger to the economy as a whole of
speculation fueled by bank loans for investment purposes.
Id. at
401 U. S.
629-634.
[
Footnote 14]
Thus, in
Data Processing, the Court found it sufficient
to establish reviewability that the general policy implicit in the
National Bank Act and the Bank Service Corporation Act was
"apparent," and that "those whose interests are directly affected
by a broad or narrow interpretation of the Acts are easily
identifiable." 397 U.S. at
397 U. S. 157.
[
Footnote 15]
Insofar as lower court decisions suggest otherwise,
see,
e.g., Control Data Corp. v. Baldrige, 210 U.S.App.D.C. 170,
180-181, 655 F.2d 283, 293-294,
cert. denied, 454 U.S. 881
(1981), they are inconsistent with our understanding of the "zone
of interest" test, as now formulated.
[
Footnote 16]
The principal cases in which the "zone of interest" test has
been applied are those involving claims under the APA, and the test
is most usefully understood as a gloss on the meaning of § 702.
While inquiries into reviewability or prudential standing in other
contexts may bear some resemblance to a "zone of interest" inquiry
under the APA, it is not a test of universal application.
Data
Processing speaks of claims "arguably within the zone of
interests to be protected or regulated by the statute or
constitutional guarantee in question." 397 U.S. at
397 U. S. 153
(emphasis added). We doubt, however, that it is possible to
formulate a single inquiry that governs all statutory and
constitutional claims. As the Court commented in
Data
Processing: "Generalizations about standing to sue are largely
worthless as such."
Id. at
397 U. S. 151.
We have occasionally listed the "zone of interest" inquiry among
general prudential considerations bearing on standing,
see,
e.g., Valley Forge Christian College v. Americans United for
Separation of Church & State, Inc., 454 U.
S. 464,
454 U. S. 475
(1982), and have on one occasion conducted a "zone of interest"
inquiry in a case brought under the Commerce Clause,
see Boston
Stock Exchange v. State Tax Comm'n, 429 U.
S. 318,
429 U. S.
320-321, n. 3 (1977). While the decision that there was
standing in
Boston Stock Exchange was undoubtedly correct,
the invocation of the "zone of interest" test there should not be
taken to mean that the standing inquiry under whatever
constitutional or statutory provision a plaintiff asserts is the
same as it would be if the "generous review provisions" of the APA
apply,
Data Processing, 397 U.S. at
397 U. S.
156.
The difference made by the APA can be readily seen by comparing
the "zone of interest" decisions discussed
supra, at
479 U. S.
394-398, with cases in which a private right of action
under a statute is asserted in conditions that make the APA
inapplicable.
See, e.g., Cort v. Ash, 422 U. S.
66 (1975);
Cannon v. University of Chicago,
441 U. S. 677
(1979). In
Cort, corporate shareholders sought recovery of
funds that a corporate official had expended in alleged violation
of 18 U.S.C. § 610, the then-current version of the Corrupt
Practices Act, which prohibits corporate expenditures and
contributions for the purpose of influencing federal candidate
elections. The Court gave the would-be plaintiffs the threshold
burden of showing that they were "one of the class for whose
especial benefit the statute was enacted," 422 U.S. at
422 U. S. 78
(internal quotation omitted; emphasis in original). The
shareholders argued that § 610 was motivated in part by Congress'
conviction that corporate officials have no moral right to use
corporate assets for political purposes. The Court, in holding that
this was not enough to give the shareholders an implied right of
action under § 610, observed that "the protection of ordinary
stockholders was, at best, a secondary concern [underlying § 610]."
Id. at
422 U. S. 81.
Clearly, the Court was requiring more from the would-be plaintiffs
in
Cort than a showing that their interests were arguably
within the zone protected or regulated by § 610.
[
Footnote 17]
Representative McFadden explained:
"[The Act] prohibits national banks from engaging in state-wide
branch banking in any State (secs. 7 and 8); it prohibits a
national bank from engaging in county-wide branching in any state
(secs. 7 and 8); it prohibits national and State member banks [of
the Federal Reserve System] from establishing any branches in
cities of less than 25,000 population (secs. 8 and 9); it prohibits
national banks from having any branches in any city located in a
State which prohibits branch banking (sec. 8); it prohibits a
national bank after consolidating with a State bank to continue in
operation any branches which the State bank may have established
outside of city limits (sec. l); it prohibits a State bank, upon
converting into a national bank, to retain in operation any
branches which may have been established outside of city limits
(sec. 7)."
66 Cong.Rec. 1582 (1925).
See also, e.g., id. at 1569
(remarks of Rep. Nelson);
id. at 1624-1625 (remarks of
Rep. Goldsborough);
id. at 1633 (remarks of Rep.
Williams);
id. at 1637 (remarks of Rep. Hull).
Congress subsequently relaxed some of the restrictions on
branching to which Representative McFadden alluded in the passage
quoted above. For example, state-wide branching by national banks
is now permitted if state law explicitly permits state-wide
branching by state banks. 12 U.S.C. § 36(c)(2). However, such
modifications obviously do not represent an abandonment by Congress
of the policy against unlimited branching.
[
Footnote 18]
Representative Wingo then remarked that the locational language
that was deleted was to make clear that the limitations on the
total amount a bank can invest in the safe deposit business applies
irrespective of whether the business is conducted on or off the
bank's premises. 67 Cong.Rec. 3232 (1926).
[
Footnote 19]
See Brief for Federal Petitioner 33-34, n. 23.
See also
n. 16,
supra, and accompanying text.
[
Footnote 20]
The legislation authorized national banks to engage in "the
business of buying and selling investment securities." Banks were
limited to buying and selling the securities "without recourse,"
and were prohibited from acquiring the securities of any one issuer
in an amount that exceeded 25% of the bank's capital stock. § 2, 44
Stat. 1226.
[
Footnote 21]
Respondent treats these prior practices as "immaterial to the
issue here" because, in the 1920's, national banks generally
carried out such transactions through affiliates, rather than
directly owned subsidiaries. Brief for Respondent 16. However, it
appears doubtful that such securities affiliates were functionally
distinguishable from subsidiaries. Various devices were used to
achieve identity of stock ownership between the affiliate and the
bank,
see W. Peach, The Security Affiliates of National
Banks 66-68 (1941), and as a Senate Subcommittee later commented,
"it goes without saying that, through identity of stock ownership,
there is identity of real control." Operation of the National and
Federal Reserve Banking Systems: Hearings Pursuant to S.Res. 71
before a Subcommittee of the Senate Committee on Banking and
Currency, 71st Cong., 3d Sess., 1052, 1057 (1931). Moreover, at the
time it passed the McFadden Act, Congress did not appear to place
any particular weight on the affiliate-subsidiary distinction;
thus, the legislative history contains references to securities
trading as "a type of business which national banks are now
conducting under their incidental charter powers." S.Rep. No. 473,
69th Cong., 1st Sess., 7 (1926); H.R.Rep. No. 83, 69th Cong., 1st
Sess., 3 (1926).
[
Footnote 22]
Congress did, of course, later restrict the types of securities
transactions in which national banks could engage through passage
of the Glass-Steagall Act in 1933.
See 12 U.S.C. § 24
(1982 ed. and Supp. III); 12 U.S.C. §§ 78, 377, 378. However,
Congress showed no intention of placing geographic restrictions on
the location of those securities transactions in which banks could
still engage. Rather, Congress emphasized that the Glass-Steagall
Act permitted banks "to purchase and sell investment securities for
their customers to the same extent as heretofore." S.Rep. No. 77,
73d Cong., 1st Sess., 16 (1933).
[
Footnote 23]
If the "competitive equality" principle were carried to its
logical extreme, the ability of a national bank to carry on an
incidental activity such as the safe deposit business would be
limited to the same extent as a state bank's ability to do so under
state law. However, as we have noted,
supra at
479 U. S. 406,
the legislative history of the McFadden Act rather clearly
indicates that Congress intended national banks to be able to carry
on a safe deposit business without locational restrictions.
JUSTICE STEVENS, with whom THE CHIEF JUSTICE and JUSTICE
O'CONNOR join, concurring in part and concurring in the
judgment.
Analysis of the purposes of the branching limitations on
national banks demonstrates that respondent is well within the
"zone of interest" as that test has been applied in our
Page 479 U. S. 410
prior decisions. Because I believe that these cases call for no
more than a straightforward application of those prior precedents,
I do not join Part II of the Court's opinion, which, in my view,
engages in a wholly unnecessary exegesis on the "zone of interest"
test. I do join the remainder of the Court's opinion, which upholds
the Comptroller of the Currency's interpretation of the McFadden
Act.
Petitioners' argument that respondent lacks standing to
challenge the Comptroller's decision in these cases is predicated
on their reading of the purpose behind the branching limitations of
the McFadden Act. They argue that Congress' only concern in not
allowing national banks to maintain more branches than their state
counterparts may maintain under state law was to ensure that the
national banks not use their newly granted branching authority to
gain a competitive edge over state banks. [
Footnote 2/1] Close examination of the Act and its
history, however, convinces me that this was not the only purpose
of the branching restrictions. Rather, the McFadden Act was in
large part a compromise in which Congress started from a general
antibranching rule and created a limited exception just large
enough to allow national banks to compete effectively with state
banks, but also narrow enough to continue to serve the policy of
exercising control on the financial power of national banks. The
general policy against branching was based in part on a concern
about the national banks' potential for becoming massive financial
institutions that would establish monopolies on financial services.
Petitioners' "zone of interest" argument is therefore predicated on
too narrow a reading of the statutory purposes, and hence too
narrow a view of the applicable zone of interest that the broad
legislative scheme sought to protect.
The National Currency Act of 1863, 12 Stat. 666, and the
National Bank Act of 1864, ch. 106, 13 Stat. 99, which provided,
inter alia, for federal chartering of national banks,
Page 479 U. S. 411
ended the 57-year hiatus during which there was no federal
involvement in banking. The National Bank Act in Rev.Stat. § 5190
provided that
"[t]he usual business of each national banking association shall
be transacted at an office or banking-house located in the place
specified in its organization certificate, [
Footnote 2/2]"
and, in 1902, the Comptroller of the Currency stated his view
that this statute prohibited national banks from branching.
See Annual Report of the Comptroller of the Currency, H.R.
Doc. No. 10, Vol. 2, 72d Cong., 2d Sess., 45-47 (1902). In 1911,
the Attorney General issued an opinion affirming that view. He
explained that neither the statute nor national banks' inherent
powers gave them the legal authority to establish branches.
Lowry National Bank, 29 Op.Atty.Gen. 81, approved in
First National Bank in St. Louis v. Missouri, 263 U.
S. 640,
263 U. S.
656-659 (1924).
By the early 1900's, some States, most notably California, had
begun to authorize their state banks to branch.
See J.
Chapman & R. Westerfield, Branch Banking 84-92 (1980 reprint);
G. Cartinhour & R. Westerfield, Branch, Group and Chain Banking
and Historical Survey of Branch Banking in the United States
195-215 (1980 reprint). Controversy soon began to brew over the
prohibition on national banks' branching.
See Chapman
& Westerfield,
supra, at 92-102. Many argued that it
was restraining the national banks too much; not only was it having
the salutary effect of preventing the national banks from
overpowering other institutions, but it was also having the
negative effect of threatening the national banks' vitality by not
allowing them to compete fairly with their state counterparts.
Others argued that branching was inherently evil and dangerous, and
that Congress should certainly not allow national banks to branch,
even though Congress might not be able to prohibit States from
allowing their banks to engage in branching.
See generally
C. Collins,
Page 479 U. S. 412
The Branch Banking Question 2-16 (1926); S. Southworth, Branch
Banking in the United States 163-184 (1928).
Congress began to focus on the branch banking issue in 1922,
when the Comptroller of the Currency called for legislative action
to reduce the competitive disparity. The next five years saw
extensive legislative debate on the branch banking crisis and the
optimum way to deal with it.
See generally Collins,
supra, at 82-110. As JUSTICE WHITE explains,
ante
at
479 U. S.
401-402, the legislation that was eventually passed in
1927, the McFadden Act, reflected a compromise between these
factions. On the one hand, the antibranching group succeeded in
preventing a wholesale abandonment of all branching restrictions;
on the other hand, the pro-branching group succeeded in obtaining
legislation that would allow national banks to establish branches
within the city limits if state banks could do so.
See
Chapman & Westerfield,
supra, at 108. [
Footnote 2/3]
The campaign against unlimited branch banking of national banks
was far more than just a campaign to protect the local bank lobby.
[
Footnote 2/4] There was real fear
of the effect that a central
Page 479 U. S. 413
bank with unlimited branching power could have on the financial
and political climate of the country. [
Footnote 2/5] Senator Reed, for example, exclaimed:
"There are advocates of the general branch bank system. There
were advocates of a single national bank, and we had one once, with
branches scattered almost everywhere. It grew so arrogant and so
powerful that it dared look 'Old Hickory' Jackson in the eye and
tell him it could put up and pull down Presidents, and it required
a vast amount of assurance for any capitalist in the world to say
that to old Andrew Jackson. Andrew Jackson struck down the branch
bank system, and he lives in song and story, and in the hearts of
the American people, because he destroyed an institution that was
creating a complete monopoly of credits and of money."
66 Cong.Rec. 4438 (1925). The McFadden Act's branching
limitations were thus geared in part "to prevent monopoly and to
prevent an extreme concentration of financial power."
See
Hearings on Federal Branching Policy before the Subcommittee on
Financial Institutions of the Senate Committee on Banking, Housing,
and Urban Affairs, 94th Cong., 2d Sess., p. 408 (1977) (Professor
Kenneth Scott explaining various justifications for the Act). It is
quite apparent that in the final compromise legislation this view
was well represented. [
Footnote
2/6]
See also ante at
479 U. S.
401-402, and n. 16.
Page 479 U. S. 414
The legislative spirit of maintaining restraints on national
banks' branching while allowing them just enough flexibility to
compete with state banks was again in force six years later, when
Congress enacted the Banking Act of 1933 (Glass-Steagall Act), 48
Stat. 162, which allowed national banks to maintain branches
outside of their home cities if state banks could.
See 12
U.S.C. § 36(c)(1). As the Court explained in
First National
Bank v. Walker Bank & Trust Co., 385 U.
S. 252 (1966), the actual impetus for the changes in the
branching rules at that time was the Comptroller of the Currency's
advocacy of a total elimination of all branching restrictions.
See id. at
386 U. S. 259
(citing Hearings before a Subcommittee of the Senate Committee on
Banking and Currency pursuant to S.Res. No. 71, 71st Cong., 3d
Sess., 7-10 (1931)). The proposal engendered the same sort of
debate that the McFadden Act had, with some seeking a total lifting
of restrictions on branch banking, and others wanting no further
relaxation of the restrictions.
See, e.g., S.Rep. No. 684,
72d Cong., 1st Sess. (1932); 76 Cong.Rec. 9890-9899 (1932).
In setting out the reasons for their opposition, many Members of
Congress described the issue in terms of stopping the undue
concentration of financial power. For example, when the Senate
Committee on Banking and Currency reported out a bill which would
have allowed national banks to establish branches without regard to
state law, the minority Report complained:
"Advocates of the branch-banking system ignore the fact that
such a system has never been tried in a country of 120,000,000
population, 3,000 miles across. They ignore the tendency in this
country to centralize control of everything, and especially of
credit. I believe that the branch-banking system would put us at
the mercy of the
Page 479 U. S. 415
financial centers."
S.Rep. No. 584,
supra, at 3 (minority views). The bill
discussed in that Report was not enacted; instead, in the midst of
a filibuster by the antibranching forces, another compromise was
reached which continued to contain a general limitation on
branching. As one of the conferees explained,
"the controversy over the respective merits of what are known as
'unit banking' and 'branch banking systems,' a controversy that has
been alive and sharp for years,"
was not settled. "It is not . . . here proposed to give the
advocates of branch banking any advantage." 77 Cong.Rec. 5896
(1933) (remarks of Rep. Luce). [
Footnote 2/7]
Petitioners therefore misconstrue the statute when they assert
that the sole purpose of the restriction on branching was to ensure
that national banks not use their new branching power to gain a
competitive advantage over state banks, whose branching power was
limited by state law. Petitioners argue that the McFadden Act
represented a rejection of any earlier or contemporaneous sentiment
against branch banking in general, and that the restrictions were
merely a throw-in to protect the state banks whose own States may
have precluded them from branching. Were that really the case, I
would agree that other competitors were merely incidental
beneficiaries of the legislation, and that respondent,
Page 479 U. S. 416
which does not represent state banks, would fall outside of the
protected zone of interest.
But this argument is not faithful to the actual history.
Instead, it is clear that Congress maintained restrictions on
branching for all the reasons that have been cited. The exception
that was created in 1927 and broadened in 1933 was merely a
concession to the reality that, unless national banks could
establish at least some branches, they could not effectively
compete with state banks that could legally branch. While
protecting state banks from the effects of the new branching power
was certainly
one of Congress' goals, it is equally
certain that the legislation also sought to control national banks
for the sake of the aforementioned broader competitive interests.
[
Footnote 2/8]
Given this understanding of the multiple purposes behind the
branch banking restrictions, this case falls squarely within our
decisions in
Association of Data Processing Service
Organizations, Inc. v. Camp, 397 U. S. 150
(1970);
Arnold Tours, Inc. v. Camp, 400 U. S.
45 (1970); and
Investment Company Institute v.
Camp, 401 U. S. 617
(1971). Just as the Court found in
Association of Data
Processing Service Organizations and
Arnold Tours,
there is embodied in the antibranching rule of the McFadden Act a
congressional purpose to protect competitors of national banks in
order to ensure that national banks remain limited entities.
Although much of Congress' attention focused on national banks'
most obvious competitors -- state banks -- there is no reason to
believe that Congress "desired to protect" state
Page 479 U. S. 417
banks "alone from competition."
Arnold Tours, supra, at
400 U. S.
46.
Because I would decide the standing issue on this ground alone,
I decline to join the Court's sweeping discussion of the "zone of
interest" test. There will be time enough to deal with the broad
issues surrounding that test when a case requires us to do so.
[
Footnote 2/1]
See Brief for Federal Petitioner 19-21; Brief for
Petitioner in No. 85-972, p. 37.
[
Footnote 2/2]
As amended, this statute appears at 12 U.S.C. § 81.
[
Footnote 2/3]
In their exhaustive survey of branch banking in America, Chapman
and Westerfield explained that
"[t]he branch bank provisions of the McFadden . . . Act
represented the minimum of concession which the anti-branch-bank
forces were willing to make, and its general purpose was to stifle
the development of branch banking and to freeze it in its
status quo."
See J. Chapman & R. Westerfield, Branch Banking 108
(1980 reprint);
see also C. Golembe & D. Holland,
Federal Regulation of Banking 1986-87, p. 134 (1986) ("McFadden Act
represented a minor victory for branching advocates," and is
"probably more correctly viewed as an anti-branching statute"); G.
Cartinhour & R. Westerfield, Branch, Group and Chain Banking
and Historical Survey of Branch Banking in the United States 285
(1980 reprint) (McFadden Act was "a sort of truce between the
interests at issue on the branch bank question").
[
Footnote 2/4]
Protection of state banks for their own sake was, of course, one
of the legislative purposes as well. Additionally, it appears that
some legislators opposed unlimited national bank branching because
they thought that the States would be forced to respond by allowing
their banks to branch, an action the legislators were reluctant to
force on the States.
[
Footnote 2/5]
Given the history of federal involvement in banking, it was only
natural that this concern would be prevalent. One of the factors
that led to President Jackson's successful "war" against the Second
Bank of the United States in 1836 was the fear of the power,
financial and political, that a national bank could wield.
See Veto Message of President Jackson, in Senate Journal,
July 10, 22d Cong., 1st Sess., 433 (1831); G. Van Deusen, The
Jacksonian Era 60-67 (1969); Golembe & Holland,
supra,
at 5.
[
Footnote 2/6]
Some other portions of the McFadden Act provide additional
evidence of the antibranching component of the legislation. For
example, the Act stopped "the further extension of state-wide
branch banking in the Federal reserve system by State member
banks." H.R.Rep. No. 83, 69th Cong., 1st Sess., 7 (1926) (quoted in
First National Bank v. Walker Bank & Trust Co.,
385 U. S. 252,
385 U. S. 257
(1966)).
[
Footnote 2/7]
Similarly, the evidence surrounding passage of the Bank Holding
Company Act of 1956, 70 Stat. 133,
as amended, 12 U.S.C. §
1841
et seq., which eliminated a "loophole" in the
McFadden Act by restricting interstate purchases of banks by bank
holding companies,
see Northeast Bancorp, Inc. v. Board of
Governors, FRS, 472 U. S. 159,
472 U. S. 169
(1985), evinces a legislative purpose that went beyond merely
protecting local bank branches.
See, e.g., H.R.Rep. No.
609, 84th Cong., 1st Sess., 2 (1955) ("Ultimately, monopolistic
control of credit could entirely remold our fundamental political
and social institutions"); 101 Cong.Rec. 8030 (1955) (remarks of
Rep. Rains) (bill is necessary "to close up and nail down the
loopholes in our banking laws -- loopholes which threaten not just
the local independent bank but the whole traditional banking system
as we know it and want to keep it").
[
Footnote 2/8]
In analyzing current policy toward branch banking, the
Department of the Treasury similarly stressed the variety of the
issues that are involved:
"Several additional issues must be considered in the analysis of
geographical restrictions and the prospects of liberalization:
competition and concentration, credit availability and service to
the local community, the survival of small banks, the safety and
soundness of the banking system, and the dual banking system."
Department of Treasury, Geographic Restrictions on Commercial
Banking in the United States: The Report of the President 12
(1981).