Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-01279/USCOURTS-ca10-90-01279-0/pdf.json

Parties Involved:
Robert L. Clarke
Appellant
Conference of State Bank Supervisors
Amicus Curiae
Federal Deposit Insurance Corporation
Not Party
Independent Bankers Association of America
Amicus Curiae
Independent Bankers of Colorado
Appellee
Resolution Trust Corporation
Not Party
State of Colorado
Appellee

Document Text:

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

STATE OF COLORADO, ex rel. Colorado 

State Banking Board; INDEPENDENT BANKERS 

OF COLORADO, a non-profit corporation, 

Plaintiffs-Appellees, 

v. 

RESOLUTION TRUST CORPORATION, an agency 

of the United States; FEDERAL DEPOSIT 

INSURANCE CORPORATION, an agency of the 

United States and; ROBERT L. CLARKE, in 

his official capacity as the Comptrolle r 

of the currency of the United States, 

Defendants-Appellants. 

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_____________________________________ ) ) 

CONFERENCE OF STATE BANK SUPERVISORS; 

INDEPENDENT BANKERS ASSOCIATION OF 

AMERICA, 

Amicus Curiae. 

STATE OF COLORADO, ex rel. Colorado 

State Banking Board; INDEPENDENT BANKERS 

OF COLORADO, a non-profit corporation, 

Plaintiffs-Appellees, 

v. 

RESOLUTION TRUST CORPORATION, an agency 

of the United States; FEDERAL DEPOSIT 

INSURANCE CORPORATION, an agency of the 

United States, 

Defendants, 

and 

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) ROBERT L. CLARKE, in his official capacity ) 

as the Comptroller of the currency o f the ) 

United States, ) 

Defendant-Appellant. ) 

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PILED 

U{liced StateS Coutt of .Appeals 

Tenth Cirruit 

FEB 11 1991 

ROBERT L 1-IOECKER 

Clerk 

No. 90-1276 

No. 90-1279 

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 1 
) 

CONFERENCE OF STATE BANK SUPERVISORS; ) 

INDEPENDENT BANKERS ASSOCIATION OF ) 

AMERICA, ) 

) 

Amicus Curiae. ) 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. NO. 90-Z-190) 

INDEPENDENT COMMUNITY BANKERS ASSOCIATION ) 

OF NEW MEXICO, a non-profit New Mexico ) 

corporation; ) 

) 

Plaintiff-Appellant, ) 

) 

THE STATE OF NEW MEXICO THE FINANCIAL ) 

INSTITUTIONS DIVISION, ) 

) 

Plaintiff-Intervenor- ) 

Appellant, ) 

) 

v. ) No. 90-2107 

) 

RESOLUTION TRUST CORPORATION, an agency ) 

of the United States; FEDERAL DEPOSIT ) 

INSURANCE CORPORATION, an agency of ) 

the United States and; ROBERT L. CLARKE, ) 

in official capacity as Comptroller ) 

of the currency of the United States, ) 

) 

Defendants-Appellees. ) 

----------------------------------------> ) 

STATE OF COLORADO; INDEPENDENT BANKERS OF ) 

COLORADO, a Colorado non-profit ) 

corporation; CONFERENCE OF STATE BANK ) 

SUPERVISORS; INDEPENDENT BANKERS ) 

ASSOCIATION OF AMERICA, ) 

) 

Amicus Curiae. ) 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW MEXICO 

(D.C. NO. CIV90-532SC) 

Ann Southworth, Department of Justice, Washington, D.C. (L. Robert 

Giffin, Director, Litigation Division and Caren S. Hersh, At-

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 2 
torney, Office of the Comptroller of the Currency1 Washington, 

D.C., of counsel; Stuart M. Gerson, Assistant Attorney General, 

William L. Lutz, United States Attorney, Michael J. Norton, United 

States Attorney, and Douglas N. Letter, Department of Justice, 

Washington, D.C., with her on the briefs), for Comptroller of the 

Currency of the United States. 

Dorothy L. Nichols, Associate General Counsel, Federal Deposit 

Insurance Corporation, Washington, D.C. (Alfred J. T. Byrne, 

General Counsel, Ann s. DuRoss, Assistant General Counsel, and 

Thomas D. Holzman, Federal Deposit Insurance Corporation, 

Washington, D.C.; John H. Bernstein and Diana c. Fields, Kutak 

Rock & Campbell, Denver, Colorado; Michael E. Tucci, Senior 

Counsel and Robert A. Ward, Counsel, Resolution Trust Corporation, 

Denver, Colorado, with her on the briefs), for The Resolution 

Trust Corporation and the Federal Deposit Insurance Corporation. 

I. Thomas Bieging, McKenna & Cuneo, Denver, Colorado (Stephen B. 

Shapiro, McKenna & Cuneo, Denver, Colorado, Barbara M.A. Walker, 

First Asst. Attorney General and Sherrie D. Vincent, Asst. Attorney General for the Attorney General Regulatory Law Section, 

Denver, Colorado, with him on the briefs), for Independent Bankers 

of Colorado and State of Colorado, ex rel. Colorado State Banking 

Board. 

Leonard J. Rubin, Bracewell & Patterson, Washington, D.C., 

(Virginia E. O'Neill and Ellen c. Starr, Bracewell & Patterson, 

Washington, D.C., for Independent Community Bankers Association of 

New Mexico: G.T.S. Khalsa and Jonathan L. Barela, Office of the 

Attorney General, Santa Fe, New Mexico, for the State of New 

Mexico, Financial Institutions Division, with him on the briefs). 

Before ANDERSON, BALDOCK, and EBEL, Circuit Judges. 

ANDERSON, Circuit Judge. 

This appeal consists of two cases challenging a Resolution 

Trust Corporation ("RTC") regulation, 55 Fed. Reg. 22,323 (1990) 

(to be codified at 12 C.F.R. § 1611.1) (the "Override Regulation"), allowing banks that acquire failed or failing savings and 

loan associations {"thrifts") to operate the thrifts' offices1 as 

1 Designating the thrifts' offices as "branches" fails to 

account for the thrifts' main offices. We uniformly refer to a 

thrift's main and branch offices as its "offices." 

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bank branches, notwithstanding state laws that would prohibit the 

acquiring bank from operating such branches. We are confronted 

with a split between two district courts within the Circuit. The 

State 'and Independent Community Bankers of New Mexico appeal a New 

Mexico district court order upholding the Override Regulation as a 

valid exercise of the RTC's statutory rulemaking authority. The 

RTC appeals a Colorado district court order holding that the Override Regulation is void and contrary to the authorizing statute. 

We respectively affirm and reverse. 

BACKGROUND 

In response to the savings and loan crisis, Congress enacted 

the Financial Institutions Reform, Recovery, and Enforcement Act 

of 1989 ("FIRREA"). Pub. L. No. 101-73, 103 Stat. 183 (1989). In 

FIRREA, Congress created the RTC and granted it the same conservatorship, receivership, and assistance powers and duties the FDIC 

possesses. 12 u.s.c. § 1441a(b)(4). 2 Congress also granted the 

RTC broad authority to "issue such rules, regulations, standards, 

policies, procedures, guidelines, and statements" as it "considers 

necessary or appropriate to carry out" its statutory purpose. 12 

u.s.c. § 1441a(b)(12)(A). That purpose, simply put, is to 

11Contain, manage, and resolve failed savings associations." 

FIRREA § 101(7), 103 Stat. at 187. FIRREA instructs the RTC to 

accomplish this objective "in a manner which maximizes the net 

present value return from the sale or other disposition of 

2 Where applicable, we uniformly cite to the u.s.c. sections 

codifying FIRREA, rather than to the Act itself. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 4 
[failed] institutions,~~ and "minimizes the amount of any loss 

realized in the resolution of cases. 11 12 U.S.C. 

§ 1441a(b)(3)(C)(i), (iv). 

Relying upon this instruction, and the language of 12 u.s.c. 

§ 1823(k), the RTC has interpreted FIRREA as authorizing it to 

override state branch banking laws preventing banks that acquired 

failed or failing thrifts in emergency acquisitions under FIRREA 

to retain and operate the thrifts' offices as bank branches. The 

RTC published a notice of its intent to adopt a rule (the Override 

Regulation) formalizing this statutory authorization. 55 Fed. 

Reg. 13,543 (proposed April 11, 1990). After considering comments, the RTC Board of Directors adopted the Override Regulation, 

which was published in the Federal Register as a final rule, effective June 1, 1990. 

The Override Regulation provides, in pertinent part: 

S 1611.1 Retention of thrift branches acquired by banks 

(a) Purpose. (1) Section 13(k) of the Federal Deposit Insurance Act (12 u.s.c. 1823(k)) ••• grants to the RTC the power to 

authorize emergency acquisitions of failed or failing savings associations. Under section 13(k), the RTC may authorize such 

acquisitions notwithstanding any provision of State law, upon making a determination that severe financial conditions threaten the 

stability of a significant number of savings associations, or savings associations possessing significant financial resources, and 

a determination that such authorization would lessen the risk to 

the RTC. Authorizations of acquisitions of State-chartered savings associations are subject to prior RTC consultation with State 

officials and a vote of 75 percent of the voting members of the 

RTC Board of Directors to authorize such acquisitions over objec- tion of State officials. 

(2) The regulations of this section provide for the retention 

and operation by acquiring banks of the offices of savings associations acquired pursuant to section 13(k). 

(b) Each existing office or other existing facility of each 

savings association that is merged or consolidated with, or the 

assets and liabilities of which are transferred to, an ins4red 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 5 
bank pursuant to section 13(k) may be retained by the insured bank 

and operated by the bank as a branch or other facility. 

55 Fed. Reg. 22,323 (1990) (to be codified at 12 C.F.R. § 1611.1). 

On May 24, 1990, First National Bank in Albuquerque ("First 

National") submitted a bid to purchase certain assets and liabilities of New Mexico Federal, a failed thrift in RTC conservatorship, including New Mexico Federal's main office in Albuquerque 

and its branch offices in Santa Fe, Taos, and Espanola. First 

National's bid was expressly contingent upon RTC override of New 

Mexico state branch banking l aw, which would not permi t First 

National to operate branches at the locations of New Mexico 

Federal's offices. 3 On May 30, 1990, the RTC notified New Mexico 

of its intent to override New Mexico's branch banking laws pursuant to its proposed acceptance of First National's bid. 

On June 1, 1990, the Independent Community Bankers of New 

Mexico4 filed suit against the RTC, the Federal Deposit Insurance 

Corporation ("FDIC", 5 and the Comptroller of the Currency 

("Comptroller"), 6 challenging the legal ity of the Override Regula3 New Mexico essentially limits bank branching to within the 

same county. N.M. Stat. Ann. §58-5-3 (1986 Repl.). Branching 

into an adjoi ning county or within 100 miles is permissible only 

if no competing banks are located in the proposed branch location. 

4 The Independent Community Bankers of New Mexico is 

Mexico nonprofit corporation representing the interests 

twenty-seven commercial bank members located throughout 

of New Mexico. 

5 The FDIC exclusively manages the RTC. 12 u.s.c. 

S 144la(b)(l)(C). 

a New 

of its 

the State 

6 Robert L. Clarke is the Comptroller of the Currency and was 

sue d in his official capacity. The Comptroller is the chief 

officer of a Department of the Treasury bureau known as the Office 

of the Comptroller of the Currency. See 12 u.s.c. s 1. The 

[footnote continued] 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 6 
tion and its application in New Mexico. On the same day, the 

Financial Institutions Division of the State of New Mexico7 

intervened as a plaintiff. On June 5, 1990, the Board of Directors of the RTC unanimously approved First National's bid for New 

Mexico Federal and authorized the override of New Mexico branch 

banking law. The State and Community Bankers of New Mexico filed 

motions for a temporary restraining order and preliminary injunction. The RTC, FDIC, and Comptroller moved to dismiss the 

complaint for failure to state a claim upon which relief could be 

granted. The district court heard argument on the motions and on 

June 15, 1990, dismissed the complaint and held that the Override 

Regulation is a "reasonable, permissible, and plausible .. interpretation of FIRREA. R. Vol. I, Tab 39, at 14. 

Before the Override Regulation was adopted, a similar RTC 

transaction was challenged in Colorado. In December, 1989, or 

January, 1990, Mesa National Bank ( 11Mesa National") submitted a 

bid for Valley Federal Savings & Loan Association ("Valley") and 

Mesa Federal Savings & Loan Association ("Mesa Federal"), both in 

RTC conservatorship. Mesa National bid $675,000, contingent on 

retaining and operating the former thrift offices as a bank office 

[footnote continued] 

Comptroller is charged by law with the administration of the 

National Bank Act. See 12 u.s.c. § 1, et seg. He is responsible 

for chartering national banking associations and approving their 

applications for permission to establish branch banking offices. 

12 u.s.c. § 21. 

7 The Financial Institutions Division of the State of New 

Mexico executes state laws governing the organization, inspection, 

supervision, liquidation, and dissolution of various depository 

institutions, including banks. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 7 
and branches, which was not permitted by Colorado Law. 8 The RTC 

approved Mesa National's proposal in January, 1990. The State9 

and Independent Bankers of Colorado10 filed for declaratory and 

injunctive relief to prevent the override of Colorado branch banking law. On February 4, 1990, the district court entered a 

Temporary Restraining Order, and the RTC was forced to restructure 

the transaction with Mesa National. Faced with individually 

chartering and capitalizing the former thrift offices as separate 

banks, Mesa National reduced its bid to $75,000. 

When the OVerride Regulation was adopted in June, 1990, 

Colorado and the Independent Bankers challenged its validity. On 

September 7, 1990, upon cross-motions for summary judgment, the 

district court held in favor of Colorado and the Independent Bankers and declared the OVerride Regulation void. The Colorado 

district court noted the pendency of the New Mexico appeal and 

recommended that the cases be considered together. All parties 

agreed, and we expedited this appeal. 

8 Colorado law only permits bank branching in extremely limited 

circumstances, inapplicable to this case. Colo. Rev. Stat. 

S 11-6-101 (1987 Repl.). 

9 In particular, the Colorado State Banking Board. The Banking 

Board is the Colorado agency empowered to administer and enforce 

the state's banking statutes. It governs the activities--

including mergers, consolidations, and transfers of assets--of 

corporations operating as banks. Colo. Rev. Stat. § 11-2-103 

(1987 Repl.). 

10 Independent Bankers of Colorado is a non-profit corporation 

representing approximately 170 commercial banks in Colorado. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 8 
I. The Chevron Standard of Review 

The States11 assert that FIRREA does not authorize the RTC to 

override state branch banking law. Our standard of review is 

well-established: 

When a court reviews an agency's construction of 

the statute which it administers, it is confronted with 

two questions. First, always, is the question whether 

Congress has directly spoken to the precise question at 

issue. If the intent of Congress is clear, that is the 

end of the matter; for the court, as well as the agency, 

must give effect to the unambiguously expressed intent 

of Congress. If, however, the court determines Congress 

has not directly addressed the precise question at 

issue, the court does not simply impose its own 

construction on the statute, as would be necessary in 

the absence of an administrative interpretation. 

Rather, if the statute is silent or ambiguous with 

respect to the specific issue, the question for the 

court is whether the agency's answer is based on a 

permissible construction of the statute. 

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 

467 U.S. 837, 842-43 (footnotes omitted), reh'g denied, 468 U.S. 

1227 (1984). See also Utah Power & Light Co. v. Secretary of 

Labor, 897 F.2d 447, 449-50 (lOth Cir. 1990); Quivira Mining Co. 

v. United States Nuclear Regulatory Cornm'n, 866 F.2d 1246, 1249 

(lOth Cir. 1989); Mustang Energy Corp. v. F.E.R.C., 859 F.2d 1447, 

1452-53 (lOth Cir. 1988) ("We will defer when an agency has chosen 

between alternative possible constructions of an ambiguous 

statute."), cert. denied, 490 u.s. 1019 (1989). 

Thus, if Congress has directly spoken to the precise question 

whether the RTC may, pursuant to FIRREA, override state branch 

banking law, we give effect to Congress's unambiguously expressed 

11 In this op~n~on, "the States" is a shorthand designation for 

appellants, the State and Community Bankers of New Mexico, and 

appellees, the State and Independent Bankers of Colorado. 

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intent. If, however, we determine that Congress did not clearly 

express its will, i.e., if FIRREA is either silent or ambiguous 

with regard to the RTC's authority to override state branch banking law, then we must determine whether the RTC's interpretation 

of FIRREA is 11 permissible." 

The relevant provision of FIRREA is codified at 12 U.S.C. 

§ 1823(k). 12 The two critical subsections are (k)(1) and (k)(4). 

Subsection (k)(4), which ostensibly discusses branching, is 

intractably ambiguous and contains no clear expression of congressional intent. Subsection (k)(1), however, expresses clear 

congressional authorization for the RTC to override state branch 

banking law. In order to give effect to the intent unambiguously 

expressed in subsection (k)(1), we uphold the Override Regulation 

as a valid exercise of the RTC's statutory authority. 

II. Saction 1823(k)(1) 

Section 1823(k)(1) authorizes the RTC to "resolve" failed 

savings associations through "emergency acquisitions." It 

provides, in pertinent part: 

(k) Emergency Acquisitions 

(1) In general 

(A) Acquisitions authorized 

( i) Transactions described 

12 It is section 217(k) of FIRREA, and adds a new subsection (k) 

to section 13 of the Federal Deposit Insurance Act. As a result, 

this crucial provision is variously referred to by parties and 

courts as section 217(k), section 13(k), and 12 u.s.c. § 1823(k). 

We uniformly refer to the U.S. Code citation. 

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Notwithstanding any provision of State law, upon 

determining that severe financial conditions threaten 

the stability of a significant number of savings associations, or of savings associations possessing 

significant financial resources, the Corporation, in 

its discretion and if it determines such authorization 

would lessen the risk to the Corporation, may 

authorize--

(I) a savings association that is eligible for 

assistance pursuant to subsection (c) of this section to merge or consolidate with, or to transfer 

its assets and liabilities to, any other savings 

association or any insured bank, 

(II) any other savings association to acquire 

control of such savings association, or 

(III) any company to acquire control of such savings association or to acquire the assets or assume 

the liabilities thereof. 

The Corporation may not authorize any transaction 

under this subsection unless the Corporation 

determines that·the authorization will not present a 

substantial risk to the safety or soundness of the 

savings association to be acquired or any acquiring 

entity. 

(ii) Terms of transactions 

Mergers, consolidations, transfers, and acquisitions under this subsection shall be on such terms as 

the Corporation shall provide 

* * * 

(vi) Continued applicability of certain state 

restrictions 

Nothing in this subsection overrides or supersedes State laws restricting or limiting the 

activities of a savings association on behalf of 

another entity. 

12 u.s.c. § 1823(k)(l)(A)(i), (ii), (vi) (emphasis added). 

Under§ 1823(k)(l), the RTC may authorize an eligible savings 

association "to merge or consolidate with, or to transfer its assets and liabilities to, any other savings association or any 

insured bank." 12 u.s.c. § 1823(k)(l)(A)(i)(I). The statute 

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states that these transactions should be effectuated "[n]otwithstanding any provision of state law," 12 u.s.c. 

§ 1823(k)(1)(A)(i), and "on such terms as the Corporation [the 

RTC] shall provide." 12 u.s.c. S 1823(k) (1) (A) (ii). 

This language grants the RTC broad authority to override 

state law that interferes with the enumerated emergency acquisitions. The Senate Report on FIRREA confirms that S 1823(k)(1)'s 

override provision "can be used to override all State law (including State constitutions), with one exception." s. Rep. No. 19, 

lOlst Cong., 1st Sess. 320 (1989) (emphasis added). That single 

exception is found in subparagraph (A)(vi), which provides that 

the RTC cannot override or supersede "State laws restricting or 

limiting the activities of a savings association on behalf .of 

another entity." 

The States draw a distinction between state law governing 

S 1823(k)(1)'s enumerated acquisitions, and state law governing 

post-acquisition operating activities. They argue that the RTC's 

override authority under§ 1823(k)(l) only extends to the former, 

and that state branch banking law governs the latter. 

The distinction finds no support in the statute. Subsection 

(k)(1} says: "Notwithstanding any provision of State law" 

(emphasis added). Moreover, the sole category of state law 

excepted from RTC override authority is a kind of postacquisition, operating law: law governing certain activities of 

savings associations. 12 u.s.c. § 1823(k) (1) (A) (vi). If "notwithstanding any State law" means "notwithstanding any State law 

governing acquisition of a savings association," Congress would 

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not need to except a category of post-acquisition, operating law 

in subparagraph (A)(vi). Instead of distinguishing between 

acquisition and operation, the statute focuses on whether a state 

law impedes the enumerated acquisition. If it does, the statute 

authorizes the RTC to override it. 

State branch banking laws impede emergency acquisitions. As 

the RTC points out, in a merger between a failing thrift and a 

healthy bank, the resulting entity will be a bank. The entity's 

branches become, by definition, bank branches. State law that 

prevents them from operating as bank branches impedes the merger. 

This is also true of a consolidation or transfer of assets and 

liabilities. In a transfer, if the acquiring entity is a bank, 

the acquired thrift's assets and liabilities, including its offices, will belong to the bank. If state law prevents them from 

operating as bank branches, it frustrates the purpose of the 

transfer. 

The States, joined by the dissent, suggest that state branch 

banking laws do not impede the enumerated acquisitions because an 

acquiring bank need not operate former thrift offices as bank 

branches. Instead, they suggest, banks may operate the former 

thrift offices as thrift subsidiaries or independently chartered 

and capitalized banks. 

While it is true that, under the statute, banks have these 

options, they are not required to pursue them. Some banks, for 

unique reasons, may choose to operate the acquired offices as 

thrift subsidiaries or as independently chartered and capitalized 

banks, but these choices are not the logical or likely result of 

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the acquisition. The bank's most compelling motive for the transaction is to acquire the thrift's deposit base and accompanying 

customer business. The deposits and the business are intertwined 

with the acquired thrift's place of business. In fact, to say 

that the bank may acquire the deposits but cannot have access to 

the depositors is to effectively deny, or at least drastically 

limit, the acquisition. 13 

Section 1823(k)(1) does not condition mergers between banks 

and failing thrifts upon subsequent divestiture of all the 

acquired thrift's offices. Such an interpretation of§ 1823(k)(l) 

robs the term "merger" of its most basic meaning. Black's Law 

Dictionary defines merger of corporations as 

[a]n amalgamation of two corporations pursuant to statutory provision in which one of the corporations survives 

and the other disappears. The absorption of one company 

by another, the former losing its legal identity, and 

latter retaining its own name and identity and acquiring 

assets, liabilities, franchises, and powers of former, 

and absorbed company ceasing to exist as a separate 

business entity. 

Black's Law Dictionary 988 (6th ed. 1990). As the definition suggests, in the mergers under§ 1823(k), the failing thrifts are 

absorbed into banks; they cease to exist as thrifts. 

At oral argument, the States asserted that "merger" is used 

in the statute as a term of art and does not carry its ordinary 

meaning. Nothing in the statute supports this assertion. To the 

contrary, substantial evidence suggests that the term "merger" 

13 In both the cases combined in this appeal, the prospective 

purchasers conditioned their bids upon retention of the failed 

thrifts' offices. In Colorado, when this possibility was 

precluded by the district court's Temporary Restraining Order, 

Mesa National reduced its bid by nearly 90%. 

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retains its accepted meaning in banking regulations. 14 In fact, 

nowhere in the federal regulatory scheme governing depository 

institutions have we found any indication that the term "merger" 

. 1 . 15 possesses a spec1a mean1ng. 

The dissent states that it is the RTC's definition of 

"merger" that is "unique. " Dissenting Opinion at 9. In support 

of this proposition, it points out that a merger may be accompanied by divestiture. No one disputes this obvious and ir14 12 u.s.c. § 215a, for example, governs the merger of national 

banks with state or other national banks. Section 215a(e) 

provides: 

The corporate existence of each of the merging 

banks or banking associations participating in such 

merger shall be merged. into and continued in the receiving association and such receiving association shall be 

deemed to be the same corporation as each bank or banking association participating in the merger. All 

rights, franchises, and interests of the individual 

merging banks or banking associations in and to every 

type of property (real, personal, and mixed) and chases 

in action shall be transferred to and vested in the 

receiving association by virtue of such merger without 

any deed or other transfer. The receiving association, 

upon the merger and without any order or other action on 

the part of any court or otherwise, shall hold and enjoy 

all rights of property, franchises, and interests • • • 

in the same manner and to the same extent as such 

rights, franchises, and interests were held or enjoyed 

by any one of the merging banks or banking associations 

at the time of the merger • • • • 

12 u.s.c. § 215a(e) ("Receiving association" is defined in 

§ 215b(4) as the "national banking association into which one or 

more national banking associations or one or more State banks, 

located within the same State, merge."). See also Ellis v. State 

Nat'l Bank of Alabama, 434 F.2d 1182, 1186-1188 (5th Cir. 1970) 

(reviewing § 215a and concluding that "Congress intended and 

advisedly used the terms consolidation and merger in their strict 

technical sense"), cert. denied, 402 U.S. 973 (1971). 

15 See 12 C.F . R. § 546 . 1, 546.2(b) (regulation governing mergers 

of federal savings associations); 12 C.P.R. § 708.1(a), (b) 

(regulation governing mergers of federally insured credit unions). 

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relevant fact. 16 The question is whether, inS 1823(k)(l), 

Congress used the term "merger" to mean "merger, but, in those 

states with branch banking restrictions, merger followed by immediate divestiture." We find no indication that Congress 

intended such a selective application of the term. Far from incorporating state law, S 1B23(k)(l) says "Notwithstanding state 

law." 

Of course, the emergency acquisitions authorized in this case 

were not mergers but transfers of assets and liabilities. The 

effect of a transfer, however, is the same: the acquired thrifts 

ceased to independently exist; their assets, including their offices, were transferred to banks. Moreover, section (k)(l) does 

not limit its authorization-of transfers to situations where the 

bank holds the acquired offices as thrift subsidiaries or independently charters and capitalizes them as banks. We will not 

16 We do dispute the dissent's characterization of the case law. 

The dissent incorrectly cites Reibert v . Atlantic Richfield Co., 

471 F.2d 727 (lOth Cir.), cert. denied, 411 u.s. 938 (1973), for 

the proposition that a transaction was viewed as a merger even 

though the surviving entity was forced to divest itself of certain 

properties. Dissenting Opinion at 9 . In reality, the proposed 

merger was "temporarily -halted" until the merging entity [Sinclair 

Oil] divested itself of properties which presented potential antitrust violations. 471 F.2d at 728. "Once the court accepted _Sinclair's divestiture, the merger was conswnmated." Id. In the 

other case, two potential merging partners similarly assured a 

court that "in implementing the consolidation they would divest 

themselves" of branch offices presenting "antitrust difficulties." 

United States v. Connecticut Nat'l Bank, 418 u.s. 656, 659 (1974). 

The cited cases underscore the RTC's definition of "merger." 

They both reflect the underlying assumption that, without judicial 

intervention, the resulting entity possesses all of the merging 

entity's assets. In both cases, the courts limited the proposed 

mergers because their natural result would have violated federal 

antitrust law. Because of the potential violations, the parties 

agreed in advance to divest themselves of the problematic assets, 

and thus alter the expected result of the mergers. 

-16-

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read the statute as imposing such an artificial limitation; and if 

state law imposes such a limitation, the RTC is authorized to 

override it. 

The dissent argues that a literal interpretation of the RTC's 

override authority inS 1823(k)(l) is dangerously broad and would 

allow the RTC to override virtual ly any state law that made an 

emergency acquisition less attractive, including zoning, 

environmental and criminal laws. This is simply not the case. 

According to its legislative history, "Section 215 [§ 1823(k)] 

permits an override of the laws of any State that constitute ~ 

material impediment to supervisory acquisitions." H.R. Rep. No. 

54, lOlst Cong., 1st Sess. 336, reprinted in 1989 u.s. Code Cong. 

& Admin. News 86, 132 (emphasis added). Laws of general applicability that merely make an emergency acquisition less attractive 

are not "material impediments." 

A zoning r estriction, for example, that prevented the 

construction of extra lanes for drive-up tellers at a given thrift 

branch location might make it less attractive for a bank to 

purchase the thrift in an emergency acquisition, but it would not 

materially impede the acquisition. In contrast, a zoning restric-

.tion that allowed only thrifts and not banks to occupy the location would be a "material impediment" to the acquisition. Indeed, 

such a law would effectively prevent the acquisition. Under the 

statute, such a significant barrier to the bank's acquisition of 

the thrift could be overridden by the RTc. 17 

17 Moreover, the dissent's implausible hypotheticals bear no 

relation to the actual appeal be fore us, which involves two 

[footnote continued] 

-17-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 17 
~n support of their argument that§ 1823(k)(l) was not 

intended to allow the RTC to override state branch banking law, 

the States cite two legislators' comments in the Congressional 

Recorct. 18 We do not find these comments persuasive. 

In surveying legislative history we have repeatedly 

stated that the authoritative source for finding the 

[footnote continued] 

states' banking l aws directly related to the essence of the 

acquisition. 

18 The following dialogue took place in the Senate: 

Mr. WIRTH: Mr. President, I seek recognition to inquire 

about certain provisions contained in the savings and 

loan conference report now before the Senate. I would 

like to ask the distinguished chairman of the Banking 

Committee, Senator RIEGLE, to clarify provisions in the 

legislation concerning the conversion of thrift charters 

to bank charters. 

Is it correct that the provisions of this act that 

permit thrifts to be converted to banks are not intended 

to allow banks resulting from such conversions to 

establish, retain, maintain, or operate branches that do 

not comply with the laws relative to the establishment 

and operation of bank branches or offices in the 

respective States where such banks are located? 

Mr. RIEGLE: The Senator's statement is correct. 

135 Cong. Rec. S10,200 (daily ed. August 4, 1989). 

Congressman Leach of the House Banking Committee repeated the 

same words in the House: 

As for specific prov1s~ons of the conference 

report, the record should be clear on the following 

items: 

First, that prov1s1ons of this act that permit 

thrifts to be converted to thrifts [sic] are not 

intended to allow banks resulting from such conversions 

to establish, retain, maintain, or operate branches that 

do not comply with the laws relative to establishment 

and operation of bank branches or offices in the 

respective States where such banks are operated. 

135 Cong. Rec. H4980 (daily ed. August 3, 1989). 

-18-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 18 
Legislature's intent lies in the Committee Reports on 

the bill, which "represen[t] the considered and collective understanding of those Congressmen involved in 

drafting and studying proposed legislation." Zuber v. 

Allen, 396 u.s. 168, 186 (1969). We have eschewed reliance on the passing comments of one Member, Weinberger 

v. Rossi, 456 u.s. 25, 35 (1982), and casual statements 

from the floor debates. United States v. O'Brien, 391 

u.s. 367, 385 (1968); Consumer Product Safety Conun'n v. 

GTE Sylvania, Inc., 447 u.s. 102, 108 (1980). 

Garcia v. United States, 469 u.s. 70, 76 (1984), reh'q denied, 469 

u.s. 1230 (1985); ~also Arkansas State Bank Comm'r v. Resolution Trust Corp., 911 F.2d 161, 174-75 (8th Cir. 1990). The cited 

statements from single members of Congress do not square with the 

congressional intent expressed in the House and Senate Reports. 19 

Moreover, the cited statements do not refer to S 1823(k), or 

even emergency acquisitions; they refer to conversions. While 

emergency acquisitions are one kind of conversion under FIRREA, 12 

u.s.c. S 1815(d)(2), they are only a small subset of conversions. 

Even if Congress did not intend all savings associations that 

converted to banks to retain their former branches as bank 

branches, Congress could still provide a specific exception with 

regard to emergency acquisitions. Subsection (k}(1)'s plain 

language indicates that they did. 

19 The House Report states that § 1823(k) "permits an override 

of the laws of any State that constitute a material impediment to 

supervisory acquisitions." H.R. Rep. No. !Olst Cong., 1st Sess. 

336, reprinted in 1989 u.s. Code Cong. & Admin. News 86, 132. The 

Senate Report states that the S 1823(k) "can be used to override 

all State law (including State constitutions), with one exception" 

not involving state branch banking laws. S. Rep. No. 19, lOlst 

Cong., 1st Sess. 320 (1989). 

-19-

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In sum, § 1823(k)(l) provides an express statutory grant of 

authority in support of the Override Regulation. 20 It authorizes 

enumerated emergency acquisitions ~~notwithstanding any provision 

of State law." State branch banking laws materially impede these 

acquisitions. In fact, they thwart the very purpose of the 

acquisitions. Nothing in§ 1823(k)(l) indicates that Congress 

intended to exempt state branch banking law from this override 

authority. It is not this court's prerogative to alter that decision. 

III. Section 1823(k)(4): The Branching Provision 

Section 1823(k)(4) states in full: 

(4) Branching provisions 

(A) In general 

If a merger, consolidation, transfer, or acqu1s1-

tion under this subsection involves a savings association eligible for assistance and a bank or bank 

holding company, a savings association may retain and 

operate any existing branch or branches or any other 

existing facil ities. If the savings association 

continues to exist as a separate entity, it may 

establish and operate new branches to the same extent 

as any savings association that is not affiliated 

with a bank holding company and the home office of 

which is located in the same state. 

(B) Restrictions 

(i) In general 

Notwithstanding subparagraph (A), if--

20 Needless to say, we find no support for the dissent's assertion that (k)(l) demonstrates a clear congressional intent to 

forbid the Override Regulation. Even if we were to find that subsection (k)(l) is silent or ambiguous with regard to the Override 

Regulation, we still must defer to a permissible construction of 

(k)(l) by the RTC. See Section IV below. 

-20-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 20 
(I) a savings association described in 

such subparagraph does not have its home 

office in the State of the bank holding 

company bank subsidiary, and 

(II) such association does not qualify as 

a domestic building and loan association 

under section 770l(a)(l9) of Title 26, or 

does not meet the asset composition test 

imposed by subparagraph (C) of that section 

on institutions seeking so to qualify, 

such savings association shall be subject to the 

conditions upon which a bank may retain, operate, 

and establish branches in the State in which the 

Savings Association Insurance Fund member is 

located. 

(ii) Transition Period 

The Corporation, for good cause shown, may 

allow a savings association up to 2 years to 

comply with the requirements of clause (i). 

12 u.s.c. s 1823(k)(4). 

The apparent purpose of S 1823(k)(4) is to address the retention of existing offices and the creation of new branches after an 

emergency acquisition. There are, of course, only two potentially 

resulting entities: . . t• b k 21 a sav~ngs assoc~a ~on, or a an . Our task 

is to determine if subsection (k)(4) clearly addresses whether a 

resulting bank may retain and operate acquired thrift offices as 

bank branches. 22 

21 Of course, the savings association may be a subsidiary of a 

bank holding company, and the statute takes this possibility into 

consideration. 

22 If Congress clearly addresses the issue in this subsection, 

then (k)(4) governs, regardless of subsection (k)(l)'s override 

authority. If, however, subsection (k)(4) is sil ent or ambiguous, 

we must gi ve e ffec t to Congress's clear intent, as expressed in 

subsection (k)(l), to allow the RTC to override state law. See 

Section IV bel ow. 

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Both sides claim that the provision clearly addresses this 

question. The States assert that subsection (k)(4) clearly 

prohibits resulting banks from retaining and operating acquired 

thrift offices as bank branches. The RTC asserts that subsection 

(k)(4) clearly authorizes resulting banks to retain and operate 

acquired thrift offices as bank branches. 23 Neither is correct. 

Subsection (k)(4) expresses nothing very clearly. It is confusing, and amenable to several plausible constructions. 

The language upon which all the interpretations pivot is 

found in the first sentence of subparagraph (A): "a savings association may retain and operate any existing branch or branches 

or any other existing facilities." 

A. The States' InterPretation 

The States assert thi s language c l early means that "only a 

resulting savings association may retain and operate any existing 

branch." We disagree. While this construction is plausible, it 

is only one interpretation of the statute. The plain language of 

the statute does not say "only a resulting savings association may 

retain existing branches." Such an interpretation requires addition of the two underlined words, each of which represents an 

interpretive conclusion. 

Addi tion of the word "only" concludes, by negative implication, that because the statute allows savings associations to 

retain existing offices, it does not allow banks to retain existing offices. To support this conclusion, the States point out 

23 In the alternative, the RTC asserts that the provision is at 

least sil ent on this question. 

-22-

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that the FIRREA's definition of "savings association" excludes 

banks. 24 But adopting this reasoning would suggest that every 

FIRREA provision that subjects savings associations to a given 

requirement necessarily exempts banks from the requirement, a 

plainly false conclusion. 

Addition of the word "resulting" concludes that the reference 

to savings association describes a post-transaction savings association. While it may, it is not clear that it does. The 

reference to "savings association" at issue is the second of four 

such references to the term in subparagraph {A). Examining the 

other references to savings association sheds light on the second 

reference's meaning. 

If a merger, consolidation, transfer, or acquisition 

under this subsection involves a savings association 

eligible for assistance and a bank or bank holding 

company, a savings association may retain and operate 

any existing branch or branches or any other existing 

facilities. If the savings association continues to 

exist as a separate entity, it may establish and operate 

new branches • . • . 

12 U. S.C. S 1823(k)(4)(A). 

The first reference to "savings association" describes a pretransaction entity--it is only eligible to be acquired. Examined 

in context, the third reference to "savings association" also 

24 FIRREA provides: 

The term "savings association" means: 

(A) any Federal savings association; 

(B) any State savings association; and 

(C) any corporation (other than a bank) that the Board 

of Directors and the Director of the Office of Thrift 

Supervision jointly determine to be operating in 

substantially the same manner as a savings association. 

12 u.s.c. § 1813(b). 

-23-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 23 
describes a pre-transaction entity. 25 The conditional phrase in 

which the third reference occurs, "If the savings association 

continues to exist as a separate entity," encompasses the possibility that the savings association may not continue to exist as 

a separate entity. It may become something else, namely, a bank. 

To clearly indicate a post-transaction entity, Congress could have 

said, "If the resulting entity is a savings association, it may 

" Instead, Congress used the term "savings associat.:t.on." 

Congress meant the pre-transaction savings association, more 

. f. 1 1 h h b . . t. "26 spec1.. l..Ca y, "t e entity t at egan as a sav~ngs assoc~a ~on. 

Subparagraph (A)'s second sentence suggests that Congress may 

have intended the second reference to "savings association" to 

mean the same thing as the ·first and third references: "the 

entity that began as a savings association." The second sentence 

not only contemplates the savings association not continuing to 

exist as a separate entity, it implies that the first sentence en25 This third reference is typically interpreted as clearly 

describing a post-transaction entity. Arkansas State Bank Comm'r 

v. Resolution Trust Corporation, 911 F.2d 161, 170 (8th Cir. 

1990). Those who have reached this conclusion have relied on the 

phrase immediately following "savings association": "continues to 

exist as a separate entity." We think this phrase requires the 

opposite conclusion. 

26 Thus, subparagraph (A)'s second sentence means: "If 'the 

entity that began as a savings association' continues to exist as 

a separate entity. " This makes sense. Prior to a specific transaction, it is unknown whether the savings association will become 

a bank and thereby lose its separate entity. 

But if the third reference is interpreted as describing a 

resulting (post-transaction) savings association, the sentence 

reads: "If 'a resulting savings association' continues to exist 

as a separate enti ty. " This is nonsense because every resulting 

savings association (thrift subsidiary) continues to exist as a 

separate entity. 

-24-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 24 
compasses such a situation. If the first sentence did not encompass a situation in which the savings association ceased to 

exist as a separate entity, Congress could have simply stated 

"only ·a resulting savings association may retain and operate any 

existing branches and may establish and operate new branches." 

The second sentence demonstrates that when Congress wanted to 

refer to resulting savings associations, it modified the term 

"savings association" (as "continuing to exist as a separate 

entity") to explicitly indicate that intent. 27 

Finally, the States rely on both the Senate and Conference 

Committee reports as evidence that S 1823(k)(4) clearly proscribes 

banks' retention of former thrifts' offices. 28 Scrutiny of the 

27 The dissent argues that the State's "straightforward" interpretation of subsection (k)(4) "uses all the words, and only the 

words, that appear in the statute." Dissenting Opinion at 12, 

n.10. In presenting this interpretation, however, the dissent is 

forced to creatively rephrase and explain what it believes the 

provision says. In describing subparagraph (A)'s first sentence, 

for example, the dissent says it "provides that if the savings and 

loan is the survivor in a merger or if it survives as a separate 

entity in a consolidation, transfer or acquisition, it may retain 

and operate its existing branches even though it may be owned by a 

bank holding company." Id. at 12 (emphasis added). The first 

sentence, however, never uses the terms "survivor" or "separate 

entity." As argued above, the second sentence employs that term 

when it wishes to refer to resulting savings associations. Moreover, in the next paragraph the dissent apparently contradicts its 

explanation by stating that a savings association cannot survive a 

merger. Id. at 13, n.11. 

The fact is, subsection (k)(4) is ambiguous, and any interpretation only espouses one viewpoint and then "explains" the 

provision's actual language in light of that viewpoint. 

28 The Senate Report states: 

F. Branching Restrictions on Certain Savings Associations 

This section relaxes the branching restrictions applicable 

under section 408(m)(5) to a thrift subsidiary of a bank or 

[footnote continued] 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 25 
reports, however, reveals the States' reliance is misplaced. As 

the RTC correctly noted during the rulemaking process, 55 Fed. 

Reg. 22,323, 22,325 (1990), the reports describe the effect of 

subparagraph (A)'s second sentence: savings associations that 

remain separate entities (as subsidiaries) are allowed to create 

new branches. 29 The reports provide no guidance as to what 

subparagraph {A)'s first sentence means. 

In sum, because subsection (k){4) does not clearly support 

the State's interpretation, we cannot conclude that Congress unambiguously expressed an intent that resulting banks may not 

'·etain existing thrift offices and operate them as bank branches. 

b. The RTC's Interpretation. 

The RTC asserts that subparagraph (A)'s first sentence 

clearly means "a resulting entity may retain and operate any 

existing branch .••• " Again, we disagree. While it is pos-

[footnote continued] 

bank holding company. Such a subsidiary will be able to 

branch to the same extent as a savings association that has 

its home office in the same State as the subsidiary does and 

is not affiliated with a bank holding company. 

S. Rep. No. 19, lOlst Cong., 1st Sess. 320 (1989). 

The Conference Report essentially tracks this language, and 

provides that "[a] thrift subsidiary of a bank or bank holding 

company may branch in the same manner as a savings association 

(not affiliated with a bank holding company) that has its home 

office in the same state as the home office of such thrift 

subsidiary. " 

H.R. Con£. Rep. No. 222, lOlst Cong., 1st Sess. 398, reprinted in 

1989 u.s. Code Cong. & Admin. News 432, 437. 

29 As the Senate and Conference Committee reports suggest, this 

relaxes previous federal law, which did not allow a resulting savings association to establish and operate new branches. 12 U.S.C. 

§ 1730a(m)(5)(A). 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 26 
sible that Congress intended this result, this construction 

requires even more gloss than does the States' construction. The 

plain language of the statute does not say "a resulting bank may 

retain existing branches." Such an interpretation requires 

replacing the term "savings association" with "resulting bank," a 

considerable interpretive leap. We do not believe that if 

Congress clearly intended "resulting bank" it would have said 

"savings association." Thus, subsection (k)(4) does not clearly 

provide that resulting banks may retain existing thrift offices 

and operate them as bank branches. 

The RTC asserts in the alternative that subsection (k)(4) is 

silent with regard to whether resulting banks may retain and operate existing thrift offices·as bank branches. 30 We agree that 

subsection (k)(4) is either silent or ambiguous on this question.31 It certainly is not clear. 32 

IV. Chevron Applied 

The determination that§ 1823(k)(4) is ambiguous does not 

affect our analysis of§ 1823(k)(l). As discussed above in Section II, § 1823(k)(l) expresses a clear congressional authorization to override state law that creates a material impediment to 

30 The RTC discussed and allowed for this possibility 

rulemaking process. 55 Fed. Reg. 22,323, 22,325 (1990) 

codified at 12 c.F.R. § 1611.1). 

in the 

(to be 

31 In this case, the intractable ambiguity effectively results 

in congressional silence. 

32 We could entertain endless arguments defending alternate 

interpretations of subsection (k)(4)'s ambiguous language, but 

are satisfied that such an exercise would be unproductive. We 

need not search for clarity that does not exist. 

-27-

we 

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 27 
emergency acquisitions. It would take equally unequivocal 

language in subsection (k)(4) to alter subsection (k)(l)'s express 

meaning. Subsection (k)(4) provides no such language. Under 

Chevron, we must "give effect to Congress's unambiguously 

expressed intent," and that is "the end of the matter." 467 u.s. 

at 842-43. We hold that FIRREA authorizes the RTC to override 

state branch banking laws that preclude banks acquiring thrifts in 

emergency acquisitions to retain and operate the thrifts former 

offices as bank branches. As a result, we also hold that the 

OVerride Regulation is a valid exercise of the RTC's authority. 

Even if we were to conclude that subsection (k)(l) is silent 

as to the specific issue of overriding state branch banking law, 

we would still uphold the RTC's interpretation of FIRREA. If subsection (k)(4) were silent, then both allegedly controlling provisions would be silent or ambiguous. Under Chevron, in the face of 

statutory ambiguity or silence, the question is whether the RTC's 

interpretation is permissible. Id. There may be other permissible interpretations of FIRREA. In fact, the RTC's interpretation may not be the "reading the court would have reached if the 

question initially had arisen in a judicial proceeding." Chevron, 

467 u.s. at 843, n.ll. That is irrelevant. We would only overturn the Override Regulation if the RTC's interpretation is impermissible.33 

33 In order to avoid according Chevron deference to the RTC, the 

dissent adopts the astonishing position that FIRREA's applicable 

provisions, including§ 1823(k)(4), are "anything but ambiguous." 

Dissenting Opinion at 2. As of today, nine federal judges have 

parsed FIRREA to determine whether the RTC is authorized to override state branch banking law. (In addition to the two district 

[footnote continued] 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 28 
The standard for determining permissibility depends on 

whether we find FIRREA's grant of rulemaking authority explicit or 

implicit. If "Congress has explicitly left a gap11 for the RTC to 

fill, then this court should give the Override Regulation 

"controlling weight unless [it is] arbitrary, capricious, or 

manifestly contrary to the statute." Id. at 843-44. However, if 

the legislative delegation to the RTC is only implicit, we overturn the Override Regulation if it is unreasonable. Id. at 844. 

We find that the legislative delegation is explicit. In 

§ 1441a(b)(12)(A), the RTC is explicitly given broad authority to 

"issue such rules, regulations, standards, policies, procedures, 

guidelines, and statements" as it "considers necessary or appropriate to carry out" its statutory purpose. Moreover, 

§ 1823(k)(1) explicitly grants the RTC authority to provide the 

terms of emergency acquisitions despite any provision of state 

law. 

Even if the rulemaking delegation were only implicit, 

however, the Override Regulation is nevertheless a permissible 

[footnote continued] 

court, and three circuit court, judges that have considered the 

companion cases before us, see Arkansas State Bank Comm'r v. 

Resolution Trust Corp., 911 F.2d 161 (8th Cir. 1990) (divided 

panel reversing district court holding that rejected the Override 

Regulation)). Five have decided that the RTC is authorized to 

override state branch banking law, and four have decided that it 

is not. Both circuit court panels were divided. Id. at 175 

(Heaney, dissenting). And, although both the Eighth and Tenth 

Circuits have upheld the Override Regulation, we do not fully 

agree as to why the Override Regulation should be upheld. Id. at 

170-71. We think it more accurate to say that FIRREA's 

provisions, especially§ 1823(k)(4), are "anything but clear." 

-29-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 29 
interpretation of FIRREA. 34 As set forth above in Section II, 

persuasive arguments support the RTC's interpretation. The Override Regulation is more than "reasonably related to the purposes 

of its enabling legislation," Mourning v. Family Publications 

Service, Inc., 411 u.s. 356, 369 (1973); it is crucial to fulfilling the RTC's congressional mandate to resolve failed and failing 

thrifts through§ 1823(k)'s enumerated acquisitions. 

Moreover, the RTC did not issue the Override Regulation in 

haste, or without considerable deliberation. The rulemaking 

notices proposing and then adopting the regulation reflect careful 

consideration of the statutory authority for, and legal implications of, issuing the Override Regulation. See 55 Fed. Reg. 

13,543; 55 Fed. Reg. 22,323. "[P]ractical agency expertise is one 

of the principal justifications behind Chevron deference." Pension Benefit Guaranty Corp •. _v. L.T.V. Corp., 110 S.Ct. 2668, 2679 

(1990). In fact, the RTC's expert "judgments about the way the 

real world works • . . are precisely the kind that agencies are 

better equipped to make than are courts." Id. We defer to this 

reasonable implementation of the RTC's congressional mandate. 

V. The McFadden Act 

The States argue that the McFadden Act prevents the RTC from 

overriding state branch banking laws. Neither the McFadden Act's 

plain language nor its legislative history reveal such a restriction. The Comptroller of the Currency, charged with implementing 

34 Since the Override Regulation is reasonable, it is not, g 

fortiori, .. arbitrary, capricious, or manifestly contrary" to 

FIRREA. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 30 
the McFadden Act (also a party to this appeal), does not interpret 

the Act as restricting the RTC's emergency override authority. 

And, judging from subsequent legislation, neither does Congress. 

Finally, if we accepted the State's interpretation of FIRREA, it 

would violate the McFadden Act in the same way that the Override 

Regulation allegedly does. 

The McFadden Act's relevant language provides: 

(c) A national banking association may, with the approval of the Comptroller of the Currency, establish and 

operate new branches • • • at any point within the State 

in which said association is situated, if such 

establishment and operation are at the time authorized 

to State banks by the statute law of the State in question by language specifically granting such authority 

affirmatively and not merely by implication or recogni- tion, and subject to the restrictions as to location 

imposed by the law of the State on State banks. 

12 u.s.c. § 36(c). 

The Act's plain language confers authority on the Comptroller 

to approve national bank branches to the extent allowed by state 

branching restrictions. The Act does not state that the Comptroller possesses the sole authority to approve national bank 

branches. It does not limit Congressional authority to override 

state branching law. Nor does the Act address the proper disposition of branches resulting from emergency acquisitions. In fact, 

the McFadden Act does not contemplate emergency acquisitions, or 

their attendant complications. 

The Supreme Court reviewed the legislative history of the 

McFadden Act and concluded that "Congress intended to place 

national and state banks on a basis of 'competitive equality' 

insofar as branch banking was concerned." First Nat'l Bank of 

Logan v. Walker Bank & Trust Co., 385 u.s. 252, 261 (1966), reh'g 

-31-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 31 
denied, 385 u.s. 1032 (1967). The Act struck a compromise by 

"maintaining restraints on national banks' branching while allowing them just enough flexibility to compete with state banks 

. . II Clarke v. Securities Industry Ass'n, 479 u.s. 388, 414 

(1987) (Stevens, J., concurring). 

The Override Regulation does not subvert the McFadden Act's 

objective of protecting competitive equality between state and 

national banks because it applies equally to both state and 

national banks. If the Regulation is applied in a particular 

state, both state and national banks may acquire and operate 

existing thrift offices. And neither state nor national banks may 

create new branches in violation of state law. The Regulation 

protects their competitive equality. 

In contrast, the States' interpretation of the McFadden Act 

would effectively subvert competitive equality. Even if, as the 

States assert, the McFadden Act is interpreted as preventing the 

override of state law as applied to national banks, the Act could 

not prevent the RTC override of state law as applied to state 

banks because McFadden only governs national banks. 35 Thus, the 

Override Regulation would have the bizarre effect of requiring 

35 It is beyond dispute that, in the absence of a federal 

limitation on preemption, federal law preempts conflicting state 

law. New York v. FCC, 486 u.s. 57, 64 (1988) ("The statutorily 

authorized regulations of an agency will pre-empt any state or 

local law that conflicts with such regulations or frustrates the 

purposes thereof. "); Lincoln Sav. and Loan Assoc. y. Federal Home 

Loan Bank Bd., 856 F.2d 1558, 1560 (D.C. Cir. 1988) ("So long as 

an agency has statutory authority to issue regulations, those 

regulations will preempt inconsistent state statutes by the simple 

operation of the Supremacy Clause."); see also Federal Deposit 

Insurance Corp. v. Bank of Boulder, 911 F.2d 1466, 1472 (lOth Cir. 

19 9 0) • 

-32-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 32 
national banks to follow state branching restrictions that the 

state banks were not required to follow. Such an interpretation 

of the McFadden Act directly subverts the Act's declared purpose. 

The Comptroller of the Currency supervises national banks and 

is responsible for administering the McFadden Act. See 12 u.s.c. 

§§ 1, 26, 27(b)(2), 36{c). 

It is settled that courts should give great weight to 

any reasonable construction of a regulatory statute 

adopted by the agency charged with the enforcement of 

that statute. The Comptroller of the Currency is 

charged with the 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, 658. 

Clarke v. Securities Indus. Ass'n, 479 u.s. at 403-04 (quoting 

Investment Co. Inst. v. Camp, 401 u.s. 617, 626-27 (1971)). 

The Comptroller has taken the position that the OVerride 

Regulation does not violate, or even implicate, the McFadden Act. 

Brief for Appellee Comptroller of the Currency at 7. For the 

reasons given above, his interpretation supports competitive 

equality. Si·nce the Comptroller's interpretation is reasonable, 

this court should give it "great weight." 

Congress has provided, in subsequent legislation, further 

support for the RTC's (and Comptroller's) interpretation of the 

McFadden Act. The Depository Institutions Act of 1982, Pub. L. 

No. 97-320, 96 Stat. 1469 ( 11Garn--St. Germain Act") provides 

branching authority for national banks quite separate from that 

contained in the McFadden Act. 

The provision, codified at 12 u.s.c. § 1823(f), authorizes 

emergency acquisitions of insured banks in default by an out-of-

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 33 
state bank, and provides, at subparagraph (4)(B), that acquiring 

banks may ~~retain and operate any existing branch or branches of 

the institution merged with or acquired • • • but otherwise shall 

be subject to the conditions upon which a national bank may 

establish and operate branches in the State in which such insured 

institution is located ... Without reference to the McFadden Act, 

or the Comptroller of the Currency, this provision authorizes 

national bank branching through emergency acquisitions. 

This provision is not an exception to the McFadden Act. To 

the contrary, it demonstrates that the McFadden Act does not need 

to be excepted. Congress did not refer to the McFadden Act in its 

subsequent legislation because McFadden does not address, let 

alone preclude, override of state law for the purposes of 

facilitating emergency transactions. As the Comptroller 

persuasively argues: 

[w]hile the McFadden Act confers routine authority on 

the Comptroller to approve national bank branches, the 

relevant provision of FIRREA, 12 u.s.c. 1823(k), is an 

emergency grant of power to a temporary, specialized 

federal agency charged with disposing of the assets of 

failed and failing thrifts. Therefore, the state law 

limitations incorporated by reference in the McFadden 

Act simply do not apply to the RTC's emergency authority 

under FIRREA. 

Brief for Appellee Comptroller of the Currency at 7. 

The States provide, perhaps unwittingly, the best argument 

against their interpretation of the McFadden Act in their 

interpretation of§ 1823(k)(4). The States claim, as discussed 

above, that subsection (k)(4) prohibits banks from retaining and 

operating as bank branches the thrift offices they obtain in an 

emergency acquisition. But approximately half of the states do 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 34 
not restrict branch banking, and would allow banks to retain and 

operate as bank branches the thrift offices they obtained in an 

emergency acquisition. In those states, FIRREA would override 

state branch banking law by imposing branching restrictions that 

the states did not enact. 36 Thus, the States' own interpretation 

of FIRREA falls victim to the same violation of McFadden allegedly 

committed by the Override Regulation. 

In reality, the McFadden Act neither contemplates nor addresses the emergency transactions authorized inS 1823(k). The 

Override Regulation does not violate either the letter or the 

spirit of the McFadden Act. To the contrary, the Override Regulation preserves McFadden's motivating principle of competitive 

equality between state and national banking institutions. 

VI. The Regulatory Flexibility Act 

The States next argue that the RTC failed to comply with the 

Regulatory Flexibility Act ("RFA"), 5 u.s.c. SS 601-612. The RFA 

requires all agencies, as part of the rulemaking process, to 

conduct a "regulatory flexibility analysis" for their proposed 

rules. 5 u.s.c. S§ 603-604. In the analysis, the agency must 

evaluate how the proposed rule will affect small entities, 

consider alternatives that would .,minimize any significant 

economic impact of the rule on [such] entities," and explain "why 

36 The States might respond by insisting that their interpretation of subsection (k)(4) is that it prohibits resulting banks 

from retaining and operating thrift offices as bank branches 

unless such branching is allowed by state law. But such an 

interpretation would only bring them further afiel d of the "actual 

language" of subsection (k)(4), which includes no such relaxation, 

and on which they place great emphasis. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 35 
each one of such alternatives was rejected." 5 U.S.C. 

§ 604(a)(3). See also 5 u.s.c. S 603(a), (c). The agency does 

not, however, have to prepare a flexibility analysis "if the head 

of the agency certifies that the rule will not, if promulgated, 

have a significant economic impact on a substantial number of 

small entities." 5 u.s.c. § 605(b). If the agency certifies, the 

RFA directs the agency to publish the certification in the Federal 

Register with the general notice of proposed rulemaking or at the 

time the final rule is published. The agency must also publish a 

succinct statement explaining the reasons for the certification. 

The States argue that the RTC violated the RFA in certifying 

that the Override Regulation would not significantly affect a 

substantial number of small entities. They assert that the RTC 

had no basis for certification, and failed to publish a succinct 

statement explaining its rationale. We disagree. 

First, the RTC did publish a statement explaining its 

certification. In its notice of a final rule, the RTC explained: 

The basis for the RTC's certification is its determination that the rule will not impose compliance 

requirements on depository institutions of any size. It 

imposes no performance standards, no fees, no reporting 

or recordkeeping criteria, nor any other type of 

restriction or requirement with which depository 

institutions must comply. Thus, it does not have the 

type of economic impact addressed by the RFA. 

55 Fed. Reg. 22,323, 22,327 (1990) (to be codified in 12 C.F.R. 

§ 1611.1). The statement presents a valid basis for certification. The RFA is meant to address "the high cost to small entities of compliance with uniform regulations. " Mid-Tex Elec. Coop., Inc. v. F.E.R.C, 773 F.2d 327, 342 (D.C. Cir. 1985) (analyz-

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 36 
inq 5 u.s.c. § 605). For purposes of flexibility analysis, "the 

relevant 'economic impact' [i]s the impact of compliance." Id. 

The OVerride Regulation imposes no regulatory compliance requirements. 

Second, by the terms of the RFA, an agency's decision to 

37 certify is not subject to judicial review. 5 u.s.c. § 611; see 

also Thompson v. Clark, 741 F.2d 401, 404-08 (D.C. Cir. 1984): 

Michigan v. Thomas, 805 F.2d 176, 188 (6th Cir. 1986). This does 

not mean that an agency may disregard completely the RFA's 

requirements, or "ignore with impunity the effect of its rules 

upon small entities." Thompson v. Clark, 741 F.2d at 408. "[T]he 

agency's decision may still be overturned because of an analysis 

so defective as to render its final decision unreasonable, or, in 

the absence of any analysis, because of a failure to respond to 

public comment concerning the rule's impact on small entities." 

Michigan v. Thomas, 805 F.2d at 188 (citing Thompson v. Clark, 741 

F.2d at 408). 

Such is not the case here. The RTC's certification was 

proper. Moreover, the RTC carefully addressed the sole public 

37 5 u.s.c. § 611 states: 

(a) Except as otherwise provided in subsection (b), any determination by an agency concerning the applicability of any of 

the provisions of this chapter to any action of the agency shall 

not be subject to judicial review. 

(b) Any regulatory flexibility analysis prepared under 

sections 603 and 604 of this title and the compliance or 

noncompliance of the agency with the provisions of this chapter 

shall not be subject to judicial review. When an action for 

judicial review of a rule is instituted, any regulatory 

flexibility analysis for such rule shall constitute part of the 

whole record of agency action in connection with the review. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 37 
comment that challenged its certification. 55 Fed. Reg. 22,323, 

22,327 (1990). Therefore, we cannot say that certification under 

the RFA rendered the Override Regulation unreasonable. 

For the foregoing reasons, we hold that FIRREA authorizes the 

RTC to override state branch banking laws that would preclude 

banks that obtain failed or failing thrifts through emergency 

acquisitions to retain and operate the thrifts' offices as bank 

branches. To the extent that FIRREA is either ambiguous or silent 

on this question, we uphold the RTC's interpretation, formalized 

in the Override Regulation, as a reasonable construction of the 

statute. Furthermore, the Override Regulation violates neither 

the McFadden Act, nor the Regulatory Flexibility Act. 

Accordingly, we REVERSE the judgment of the Colorado district 

court, and AFFIRM the judgment of the Mew Mexico district court. 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 38 
Ebel, Circuit Judge, dissenting: 

I must respectfully dissent. After applying the traditional 

rules of statutory construction to 12 u.s.c. § 1823(k)(l) & 

(k)(4), I find these statutory provisions to be unambiguous and 

the RTC's interpretation of them to be incorrect. The RTC is not 

entitled to substantial deference with respect to its 

interpretation. Furthermore, the RTC's interpretation is 

unacceptable under any standard of review. 

Standard of Review 

The substantial deference standard of review discussed in 

Chevron, U.S.A. v. Natural Resources Defense Council, 467 u.s. 837 

(1984), and its progeny is not implicated in this case. We are to 

afford an administrative agency substantial deference in its 

interpretation of Congressional authority only if we find the 

relevant authority to be ambiguous. Before we find an ambiguity, 

however, we must first employ the traditional rules of statutory 

construction to aid us in discerning the Congressional intent: 

The judiciary is the final authority on issues of 

statutory construction and must reject administrative 

constructions which are contrary to clear congressional 

intent. • • • If a court, employing traditional tools 

of statuto~ construction, ascertains that Congress had 

an intention on the precise question at issue, that 

intention is the law and must be given effect. 

Id. at 843 n.9. 

The Court subsequently reaffirmed this principle in INS v. 

Cardoza-Fonseca, 480 U.S. 421, 446-47 (1987) (rejecting an INS 

construction of the Refugee Act of 1980 by "(e]mploying 

traditional tools of statutory construction''). See also NLRB v. 

United Food & Commercial Workers Union, 484 u.s. 112, 123 (1987) 

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 39 
( 11 0n a pure question of statutory construction, our first job is 

to try to determine congressional intent, using 'traditional tools 

of statutory construction.' If we can do so, then that 

interpretation must be given effect, and the regulations at issue 

must be fully consistent with it."). Therefore, the deference 

principle upon which the RTC bases its argument only applies if we 

find the applicable provisions to be ambiguous after applying the 

traditional tools of statutory construction. 1 After applying the 

tools of statutory construction, I find the applicable provisions 

to be anything but ambiguous. 

1 Furthermore, the RTC in promulgating the Override Regulation 

arguably violated a Presidential Executive Order: 

By the authority vested in me as President by the 

Constitution and laws of the United States of America, 

and in order to restore the division of governmental responsibilities between the national government and the 

States that was intended by the Framers of the 

Constitution and to ensure that the principles of 

federalism established by the Framers guide the 

Executive departments and agencies in the formulation 

and implementation of policies, it is hereby ordered as 

follows: 

(4) Special requirements for Preemption 

(b) Where a Federal statute does not preempt State 

law (as addressed in subsection (a) of this section), 

Executive departments and agencies shall construe any 

authorization in the statute for the issuance of 

regulations as authorizing preemption of State law by 

rule-making only when the statute expressly authorizes 

issuance of preemptive regulations or there is some 

other firm and palpable evidence compelling the 

conclusion that the Congress intended to delegate to the 

department or agency the authority to issue regulations 

preempting State law. 

Exec. Order No. 12612, 52 Fed. Reg. 41685 (1987). 

-2-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 40 
McFadden Act 

The analysis must begin with the McFadden Act, 

12 u.s.c. § 36. The McFadden Act reads in pertinent part: 

The conditions upon which a national banking 

association may retain or establish and operate a branch 

or branches are the following: 

A national banking association may, with the 

approval of the Comptroller of the Currency, establish 

and operate new branches . . . at any point within the 

State in which said association is situated, if such 

establishment and operation are at the time authorized 

to State banks by the statute law of the State in 

question by language specifically granting such 

authority affirmatively and not merely by implication or 

recognition, and subject to the restrictions as to 

location imposed by the law of the State on State banks. 

12 u.s.c. 36(c). 

Section 36(c) permits national banks to establish branches if 

such branches could be established by state banks under state law. 

First Nat'l Bank of Logan v. Walker Bank and Trust Co., 385 u.s. 

252, 260 (1966). Section 36(c) is the cornerstone branching 

authority for national banks and represents a Congressional 

"response to the competitive tensions inherent in a dual banking 

structure where state and national banks coexist in the same 

area." First Nat'l Bank in Plant City v. Dickinson, 396 U.S. 122, 

131 (1969). 

The RTC interpretation of S 1823(k)(1) &: (k)(4) is in direct 

conflict with the McFadden Act because the RTC reads those 

provisions to permit branch banking in circumstances under which 

the McFadden Act would prohibit it. One of the fundamental 

cannons of statutory construction that we must consult before 

deferring to the RTC's "interpretive expertise" is that 

"[a]mendments by implication, like repeals by implication, are not 

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Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 41 
favored." United States v. Welden, 377 U.S. 95, 102 n.12 (1964). 

See National Resources Defense Council. Inc. v. Hodel, 865 F.2d 

288, 317-18 (D.C. Cir. 1988). See also Ruckelshaus v. Monsanto 

Co., 467 U.S. 986, 1017 (1984) (partial repeal by implication is 

disfavored). Admittedly, the Congress could provide an 

alternative authority for national bank branching allowing 

national banks to operate branches in states where state laws 

prohibit state banks from operating branches. But, whether 

codified as a separate statute or as a modification of the 

McFadden Act itself, the result would be the same--such an action 

would constitute an amendment of the McFadden Act. 2 Therefore, 

the RTC's Override Regulation, based upon a purported amendment of 

the McFadden Act by implication, is unacceptable. 3 

The RTC's interpretation of S 1823(k) also violates a second 

cannon of statutory construction: "[W]here there is no clear 

intention otherwise, a specific statute will not be controlled or 

nullified by a general one, regardless of the priority of 

enactment." Crawford Fitting Co . v. J.T. Gibbons, Inc., 482 U.S. 

437, 445 {1987) (quotation omitted) (emphasis in the original). 

2 The thought that the legislative wellspring for a regulation of 

the magnitude of the Override Regulation would be buried four 

organization levels within a section of the code entitled 

Corporation Monies is certainly troubling. Perhaps the real 

problem is that if statutory interpretation can legitimately be 

based upon isolated subsections of a statutory scheme that spans 

1106 pages of the United States Code, one could find support for 

an unimaginable number of agency actions. 

3 Cf. 12 u.s.c . S 36(c) where federal branch banking is 

authorized only where it is "authorized to state banks by the 

statute law of the state in quest ion by language specifically 

granting such authority affirmatively and not merely Q¥ 

implication .... " (emphasis added). 

-4-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 42 
Here, the RTC seeks to rely primarily on the general language of 

§ 1823(k)(l) to override the very specific language of the 

McFadden Act, which unequivocally and directly prohibits federal 

branch banking in states where state branch banking is not 

allowed. I do not believe that it is too much to ask that when 

and if Congress decides to amend a fundamental sixty-three yearold banking statute that it should do so explicitly. These two 

canons of statutory construction lead me to conclude that 

§ 1823(k) does not, in any manner, authorize branch banking in a 

way that otherwise is clearly prohibited by the McFadden Act. 

Thus, I would never reach the point of relying on the RTC's 

interpretation of these provisions. 

Section 1823(k)(l)(A)(i) 

Putting aside for a moment the McFadden Act, it seems to me 

that the RTC's interpretation of§ 1823(k}(l)(A)(i) by itself is 

flawed. 4 Section 1823(k)(l)(A)(i) begins with a phrase that is 

relied upon heavily by the RTC: "Notwithstanding any provision of 

State law . " This phrase, however, does not exist in a 

vacuum--it exists in a particular location within § 1823. It 

grammatically modifies just the three subparts that fall directly 

beneath it (I, II and III). When read together, 

4 Expanding §(k)(l)(A)(i)(I) to reach state branch banking laws 

strains credulity--especially since § 1823(k) actually contains a 

subsection that directly addresses branch banking. The effect of 

the RTC's analysis is to give a subsection of § 1823(k) that does 

not explicitly address the topic of branch banking--(l)(A)(i)(I)--

more weight than the subsection that explicitly addresses 

branching--(4)(A). 

-5-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 43 
§ 1823(k)(l)(A)(i)(I-III) reads: 

Notwithstanding any provision of State law • • • the 

Corporation • • • may authorize--

(!) a savings association ••• to merge or 

consolidate with, or to transfer its assets and 

liabilities to, any other savings association or any 

insured bank, 

(II) any other savings association to acquire 

control of such savings association, or 

(III) any company to acquire control of such 

savings association or to acquire the assets or assume 

the liabilities thereof. 

Section 1823 (k)(l)(A)(i)(I) allows the RTC to override any 

state law that precludes a merger of a savings and loan with a 

bank. That would include any state law that straight out 

precludes such mergers--and that was undoubtedly the main purpose 

behind this statutory provision. We are not confronted here with 

any such law in Colorado or-New Mexico. Section 

182J(k)(l)(A)(i)(I) would also, presumably, override state laws 

which apply so onerously to a merger transition between a bank and 

a savings and loan that they effectively preclude such a merger. 

Such laws might be, for example, laws that harshly tax such 

transactions or that impose other restrictions that materially 

disadvantage such a merged entity. Here, however, by 

circumventing the McFadden Act, the RTC is seeking not to remove a 

disadvantage, but rather is seeking a competitive advantage over 

all other federal and state banks in Colorado and New Mexico--an 

advantage that it hopes to turn into cash. I cannot believe 

Congress intended to give the RTC such power, particularly via the 

tortured and subtle inferences upon which the RTC relies. 

In any event, the RTC's reliance upon the "notwithstanding 

any provision of state law" language in support of the Override 

-6-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 44 
Regulation is misplaced. It is not state law that prohibits these 

federal banks, which are the subject of the instant litigation, 

from operating with branches; it is federal law (the McFadden Act) 

that prohibits them from so operating. The McFadden Act 

incorporates by reference state branch banking laws governing 

state banks. Therefore, it is the McFadden Act that requires 

uniformity between the way federal and state banks may operate 

insofar as branching is concerned. There is absolutely nothing in 

the language of S 1823(k)(l)(A)(i)(I) that gives the RTC the 

authority to override federal law. 5 

The State's interpretation of (k)(l) will not lead to any 

inequality between federal and state banks that may desire to take 

over a failed savings and loan that has branch locations. If the 

state prevents state bank branching, then a state bank could not 

maintain the branches of the acquired savings and loan as separate 

bank branches. Nothing in (k)(l) authorizes the RTC to override 

that particular state law. Similarly, if a federal bank acquired 

such a savings and loan, the McFadden Act would prevent it from 

maintaining the branches as bank branches. Nothing in (k)(l) 

overrides the McFadden Act. Thus, there is complete equality 

between federal and state banks, and the choice of whether to 

5 I find little persuasive value in the fact that Congress 

enacted subsection (vi) to {k)(l)(A) that prevents an override 

state laws restricting activities of a savings association on 

behalf of another entity. The fact that Congress specifically 

chose to prohibit one particular form of override of state law 

does not mean that it intended to authorize override of other 

prov1s1ons. To the contary, it appears that (k)(l)(A)(vi) 

provides additional support for the principles of federalism by 

allowing states to pass laws preventing banks or other entities 

from circumventing state laws by transacting business through 

"sham" savings and loan institutions. 

of 

-7-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 45 
.. 

allow banks to maintain branches is left to the states, as the 

McFadden Act intended. See State of Utah ex rel .• Department of 

Financial Institutions v. Zions First National Bank of Ogden, 

Utah, '615 F.2d 903, 906 (lOth Cir. 1908), where this court 

construed the McFadden Act as guaranteeing States the right to 

determine "when, where and how, a national bank may branch, if 

indeed it may branch at all." 

Further, in order to sustain its position, the RTC is forced 

to advance a novel and most peculiar definition of the term merger 

that includes within its scope the operation of the surviving 

entity after the merger actually occurs. The RTC is forced to 

take the position that any state laws that materially affects the 

resultant entity's operation after the merger is one which could 

be considered to preclude the underlying merger or consolidation. 

Under the RTC's definition, if the surviving entity is forced to 

divest itself of any of the holdings of the merged entity or even 

if it is forced to operate any of the merged holdings in a 

different way, that transaction is not, therefore, a merger. The 

RTC can point to no authority supporting this expansive definition 

of merger. The ordinary and standard definition of merger has to 

do only with the form of the legal joinder of two entities, not 

with the way the surviving entity is subsequently operated. 

Black's Law Dictionary defines merger of corporations as: 

An amalgamation of two corporations pursuant 

to statutory provision in which one of the 

corporations survives and the other 

disappears. The absorption of one company by 

another, the former losing its legal identity, 

and latter retaining its own name and identity 

and acquiring assets, liabilities, franchises, 

-8-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 46 
and powers of former, 6 and absorbed company 

ceasing to exist as separate business entity. 

Black's Law Dictionary 988 (6th ed. 1990) (footnote added). See 

also 15 w. Fletcher, Cyclopedia of the Law of Private CofPorations 

§ 7041 (rev. perm. ed. 1990). The RTC's unique definition of 

merger has no support in the caselaw. See, e.g., United States v. 

Connecticut Nat'l Bank, 418 U.S. 656, 659 (1974) (bank merger 

viewed as a merger even though the banks intended to divest 

themselves of a number of branch offices); Reibert v. Atlantic 

Richfield Company, 471 F.2d 727, 728 (lOth Cir.), cert. denied, 

411 u.s. 938 (1973) (viewing the transaction as a merger even 

though the surviving entity "was forced to divest itself of all 

marketing properties in the-Northeastern and Southeastern . 

states."). Indeed, to make matters worse, even if there was 

support for the RTC's anti-divestiture definition of the term 

merger, this definition would have no application in this case. A 

state law prohibiting a bank from operating former savings and 

loan branches as bank branches does not work a divestiture. The 

bank is not required to disgorge any of the customer deposits or 

other financial assets--the law simply prohibits it from operating 

the former savings and loan branch offices as bank offices. 7 

6 As pointed out, infra, an absorbed savings and loan had the 

power to maintain savings and loan branches prior to the merger 

and that power may unquestionably be passed on to the acquiring bank to maintain savings and loan branches. It never had the 

power to maintain bank branches, and hence it could not pass such 

a right on to the surviving bank. 

7 The bank could service the savings association's branch accounts 

at the former savings and loan branch locations by incorporating 

each location as a separate bank and by meeting the bank capital 

requirements at each location. 

-9-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 47 
.. 

The RTC argues that the post-merger operating restriction on 

branch banking may render the target savings and loan so 

unattractive as to destroy its value as a merger candidate. .There 

are several problems with this argument. First, it is simply 

unsupported in the record. Second, the ability to operate bank 

branches is not an asset that the savings and loan had in the 

first place. Because the savi ngs and loan never had such a right 

or interest to sell, it does not diminish the value of the savings 

and loan to prohibit a successor bank from operating its savings 

and loan branches as bank branches. Such a restriction only 

forecloses an enhancement of the value of the savings and loan. 

Of course, the value of a savings and loan could be enhanced in 

many ways if a bank could somehow acquire immunity from state laws 

by the expediency of purchasing a savings and loan. But 

absolutely nothing in§ 1823(k)(l)(A)(i)(I) gives the RTC the 

power to sell not only a failed savings and loan but also to 

create new dispensations from state law that may be appended to 

the savings and loan to enhance its value. The RTC has suggested 

no limit to its power to create dispensations from state law other 

than its suggestion that we trust it not to abuse this power. 

What if the RTC decides that a savings and loan will have more 

value as a merger candidate if it can bestow immunity to its 

merger partner from state zoning laws, or pollution laws, or 

Sunday closure laws? May the RTC abrogate those state laws too? 

There is absolutely nothing in the way the RTC reads its authority 

under§ 1823{k)(l) that would limit its power to override those 

laws as surely as it claims power to override state bank branching 

-10-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 48 
laws. Under the RTC's interpretation of§ 1823(k)(1)(A)(i)(I), it 

has the power (though it assures us it would not use it) to 

vitiate all state laws that would make a failed savings and loan a 

less attractive merger candidate. 

Congress could not have intended to give the RTC such 

sweeping powers so contrary to the McFadden Act and basic 

principles of federalism. Although the RTC clearly has the desire 

and intent to acquire such powers, we must keep in mind that it is 

Congressional intent--not the RTC's intent--8 that we are seeking 

to determine. It seems clear to me that Congress did not intend 

to give the RTC such sweeping powers and certainly nothing in 

§ 1823(k) explicitly gives it such powers. 9 

Section 1823(k)(4) 

The other statutory provision the RTC cites is 

§ 1823(k)(4)(A). Section 1823(k)(4)(A) is, in fact, the most 

relevant portion of FIRREA because it is the only provision that 

deals explicitly with branch banking. Section 1823(k)(4)(A) reads 

in pertinent part: 

8 The intent of the RTC and the Comptroller of the Currency is 

clear. They hope to achieve through the unfortunate savings and 

loan crisis something that they have never been able to persuade 

Congress to do forthrightly--to vitiate and override federal law 

prohibiting branch banking by national banks in states where 

branch banking by state banks is prohibited. See Arkansas State 

Bank Comm'r v. Resolution Trust Corporation, 911 F.2d 161, 177 

(8th Cir. 1990) (Heaney, J., dissenting). 

9 Although the majority argues that these examples are farfetched, 

it might actually be easier to argue that the RTC has the power to 

override state zoning, polution, and sunday closure laws that it 

would be to justify the RTC's power to authorize federal branch 

banking in states where branch banking is prohibited. This is 

because Congress has expressly addressed branch banking, both in 

the McFadden Act and in§ 1823(k)(4), whereas it has not sought 

explicitly to preserve state authority in these other areas. 

-11-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 49 
.. 

If a merger, consolidation, transfer, or 

acquisition under this subsection involves a savings 

association eligible for assistance and a bank or bank 

holding company, a savings association may retain and 

operate any existing branch or branches or any other 

existing facilities. If the savings association 

continues to exist as a separate entity, it may 

establish and operate new branches to the same extent as 

any savings association that is not affiliated with a 

bank holding company and the home office of which is 

located in the same State. (emphasis added). 

By its terms, this section appears to provide independent 

authority to maintain branches in only two situations. The first 

sentence provides that if the savings and loan is the survivor in 

a merger or if it survives as a separate entity in a 

consolidation, transfer or acquisition, it may retain and operate 

its existing branches even though it may be owned by a bank 

holding company. The second sentence provides that if, after a 

merger, consolidation, transfer or acquisition, the savings and 

loan continues to exist as a separate entity, it may open new 

branches to the same extent as a savings and loan that is not 

affiliated with a bank holding company. 10 This interpretation is 

straightforward; it gives meaning to every word; it does not 

violate any defined terms; it does not conflict with the McFadden 

10 The RTC argues that the second sentence, which begins with "If 

the savings association continues," implies that the first 

sentence deals with a situation where the savings and loan does 

not continue as a separate entity following the merger. I do not 

find this argument persuasive. The plain language of the first 

sentence simply provides that the savings association may retain 

and operate the pre-transaction branches and the second sentence 

then provides that the savings association may establish and 

operate ~ branches notwithstanding the fact that it may be owned 

by a bank or may not have its home office in the state where the 

branches are located. This is the only interpretation that does 

not violate the definition of savings association provided by 

Congress and that uses all the words, and only the words, that 

appear in the statute. See infra note 12 & accompanying text. 

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Act; and it makes sense. Because this section only expressly 

authorizes branches to be maintained when they are operated by a 

surviving savings and loan entity, a negative implication may be 

drawn that Congress did not intend banks to be able to maintain 

branches if to do so would violate the McFadden Act. 

The RTC contorts this section to provide support for the 

Override Regulation by pretending that if a savings association 

merges into a bank, the second reference to "savings association" 

in the first sentence refers to the surviving bank that has 

11 absorbed the savings association as a result of the merger. 

However, this gives the term "savings association" a meaning that 

is statutorily proscribed. 12 In 12 u.s.c. § 1813(b), Congress 

defined savings association· as follows: 

'I'l1e term "savings association" means--

(A) any Federal savings association 

{B) any State savings association; and 

(C) any corporation (other than a bank) that the 

Board of Directors and the Director of the Office of 

Thrift Supervision jointly determine to be operating in 

substantially the same manner as a savings association. 

(emphasis added). 

11 This reference cannot refer to the former savings association 

because as the majority notes, after a merger "the less important 

ceases to have an independent existence." Blacks Law Dictionary 

at 988. 

12 The RTC's reliance upon the "conditional if" in the second 

sentence in interpreting the first reference to savings 

association is troubling for still another reason. The second 

sentence was added when Congress enacted S 1823(k)(4) to replace 

S 1730a(m)(5). Because the first sentence predated the second 

sentence, we cannot rely on the second sentence as an 

interpretative guide for the meaning of the first sentence when it 

was first enacted. And there is absolutely nothing in the 

legislative history to suggest that Congress intended the 

narrowly-drawn second sentence to result in such a far-reaching 

amendment to the first sentence and to the McFadden Act. See 

infra n.l4 & accompanying text. ---

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Thus, Congress has specifically precluded the definition of 

"savings association" that the RTC now advances. 13 

Legislative History 

The legislative history also undermines the RTC's 

interpretation of (k)(l) and (k)(4). During the floor debates, 

Senator Wirth specifically asked Senator Riegle, the chairman of 

the Senate Banking Committee, whether the FIRREA conversion 

transaction provisions--including the (k)(4) emergency 

transaction--would permit the RTC to circumvent the McFadden Act. 

Senator Riegle assured him that they would not: 

MR. WIRTH: Mr. President, I seek recognition to inquire 

about certain provisions contained in the Savings and 

Loan Conference Report. I would like to ask the 

distinguished Chairman of the Banking Committee, Senator 

Ri egle, to clarify provisions in the legislation 

concerning the conversion of thrift charters to bank 

charters. 

Is it correct that the provisions of this act that 

permit thrifts to be converted to banks are not intended 

to allow banks resulting from such conversions to 

establish, retain, maintain, or operate branches that do 

not comply with the laws relative to the establishment 

and operation of bank branches or offices in the 

respective States where such banks are located? 

MR. RIEGLE: The Senator's statement is correct. 

135 Cong . Rec. Sl0,200 (daily ed. August 4, 1989). Congressman 

Leach of the House Banking Committee agreed with this assessment: 

As for specific provisions of the conference report, the 

record should be clear on the following items: 

13 The RTC makes the disingenuous argument that if a savings 

association merges into a bank, "the second reference to 'savings 

association' [in the first sentence] (can] ..• be read as 'the 

entity that the savings association becomes." Unfortunately for 

the RTC, in this type of mer ger the entity that the savings 

association becomes is a bank, and the definitional statute 

specifically says that a bank cannot be a savings association. 

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First, that prov1s~ons of this act that permit thrifts 

to be converted to thrifts [sic.] [banks] are not 

intended to allow banks resulting from such conversions 

to establish, retain, maintain, or operate branches that 

do not comply with the laws relative to establishment 

and operation of bank branches or offices in the 

respective States where such banks are operated. In 

other words, the Douglas or McFadden Acts are not 

intended to be circumvented by this statute. 

135 Cong. Rec. H4980 (daily ed. August 3, 1989) (emphasis added). 

The majority argues that these "passing comments" and "casual 

statements" are not authoritative. Nonetheless, the Supreme Court 

in Chevron U.S.A., a case upon which the majority heavily relies, 

frequently cited to key portions of relevant floor debate in order 

to discern legislative intent. Chevron U.S.A., 467 U.S. at 852-53 

& n.25. Even the House Conference Committee Report, which as the 

majority notes is the "authoritative source for finding the 

Legislature's intent," suggests that the RTC's interpretation is 

incorrect. The Conference Report states that: 

The acquisition of failing thrifts by banks or 

bank holding companies is authorized. A 

thrift subsidiary of a bank or bank holding 

company may branch in the same manner as a 

savings association (not affiliated with a 

bank holding company) that has its home office 

in the same state as the home office of such 

thrift subsidiary. 

H.R. Conf. Rep. No. 101-222, lOlst Cong., 1st Sess. 398, reprinted 

in 1989 u.s. Code Cong. & Admin. News 432, 437. There would have 

been no reason to limit the discussion of authorized branches in 

this report to a thrift subsidiary if banks could directly retain 

and establish branches in their own names in contravention of the 

McFadden Act. 14 

14 The majority argues that the Conference Committee Report is 

footnote continued . -15-

Appellate Case: 90-1279 Document: 01019725662 Date Filed: 02/11/1991 Page: 53 
After applying the well-established rules of construction, I 

reach the conclusion that§ 1823(k)(4)(A) clearly and 

unambiguously does not allow banks to use the branches of acquired 

savings and loans as bank branches in violation of the McFadden 

Act. This reading of the statutes in question is further 

bolstered by the long-established policies of the McFadden Act and 

by the legislative history of FIRREA. From all quarters it seems 

to me that the RTC has taken an indefensible position. Therefore, 

I DISSENT. 

. . . footnote continued 

inapposite because it only addresses the second sentence of 

§ 1823(k)(4)(A), which was added as an amendment to the precusor 

statute, § 1730a(m)(S)(A). I disagree. It is clear that the 

Conference Committee Report is a summary of S 1B23(k)(4)(A) in its 

entirety. For example, the first sentence ("The acquisition of 

failing thrifts by banks or bank holding companies is 

authorized.") was true under S 1730a(m) (5) (A) as well. 

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