Viewpoint: Preemption Authorized for State Banks, Too

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The Supreme Court's April 17 decision in Watters v. Wachovia holds that states have no regulatory authority over national-bank operating subsidiaries, because of preemption by the OCC's visitorial powers, the same as for the national bank. This major preemption question is now settled.

A corollary issue for state banks: Watters squarely supports a parallel result under a federal statute enacted last fall that clothes the home-state supervisors of state-chartered banks with visitorial powers parallel to the OCC's.

Congress gave the home-state supervisors general federal visitorial powers over state banks (and their operating subsidiaries) in Section 711 of the Financial Services Regulatory Relief Act of 2006. Section 711 and the 1997 "applicable law" amendments to the Riegle-Neal Act establish a federal regime providing …