Supreme Court Considers Whether to Preempt State Bank Red Tape

On Thursday, November 29, the Supreme Court heard oral argument in Watters v. Wachovia Bank, which will decide whether federal law preempts state regulators from compelling many national bank subsidiaries to register with them.

CEI filed an amicus brief with the Court on behalf of economists and legal scholars in support of the bank, pointing out that state lending regulations and red tape can increase the cost, and reduce the availability, of credit to borrowers.

The State of Michigan sought to compel a subsidiary of Wachovia, a national bank, to register with it (Wachovia’s subsidiary, Wachovia Mortgage, is chartered by the State of North Carolina).