Document: 472 U.S. 159 105 S.Ct. 2545 86 L.Ed.2d 112 NORTHEAST BANCORP, INC., et al., Petitionersv.BOARD OF GOVERNORS the FEDERAL RESERVE SYSTEM al. No. 84-363. Argued April 15, 1985. Decided June 10, Syllabus The Bank Holding Company Act of 1956 (BHCA) requires a bank holding company to obtain approval Federal Reserve Board (Board) before it may acquire bank. Section 3(d) (known as Douglas Amendment) prohibits from approving an application located in one State another unless acquisition "is specifically authorized by statute laws which such is located, language that effect and not merely implication." Substantially similar Connecticut Massachusetts statutes provide out-of-state with its principal place business other New England States in-state bank, provided accords equivalent reciprocal privileges enacting State's banking organizations. Certain companies (respondents here) applied for purposes either or statute, seeking acquisitions banks those States. Petitioners, prospective competitors, opposed proposed proceedings Board, contending were Amendment that, if they were, applicable discriminating against non-New companies, violated Commerce, Compact, Equal Protection Clauses Constitution. Rejecting petitioners' contentions, approved applications, Court Appeals, consolidated review proceedings, affirmed. Held: 1. are kind contemplated lift ban on interstate acquisitions. Amendment's plainly permits federal entirely, although does indicate partially ban, neither allowed only alternatives leaving lifting completely. legislative history indicates Congress intended allow each flexibility approach, contemplating some might without opening themselves up everywhere Nation. Moreover, statutes, allowing regional acquisitions, consistent BHCA's purpose retaining local, community-based control over banking. Pp. 168-173. 2. do violate Commerce Clause. Congress' commerce power dormant here, but has been exercised enactment BHCA Amendment, authorizing challenged state statutes. actions authorizes invulnerable constitutional attack under 174-175. 3. Compact Clause, provides no State, consent, shall enter into agreement compact State. Even assuming, arguendo, (along theory) constitute compact, "application Clause limited agreements 'directed formation any combination tending increase political States, encroach upon interfere just supremacy United States.' " Hampshire v. Maine, 426 363, 369, 96 2113, 2117, 48 701, quoting Virginia Tennessee, 148 503, 519, 13 728, 734, 37 L.Ed. 537. In view comply BHCA, cannot possibly infringe supremacy. Nor question enhance at expense have impact structure. 175-176. 4. favor corporations within region parts country. However, Massachusetts, their considered basis combined beneficial increasing number competitors need preserve close relationship between community who credit credit, headquartered outside would threaten independence local institutions. These concerns meet traditional rational judging equal protection claims. Metropolitan Life Ins. Co. Ward, 470 869, 1676, 84 751, distinguished. 176-178. 740 F.2d 203 (CA2 1984) Stephen M. Shapiro, Chicago, Ill., petitioners. Sol. Gen. Rex E. Lee, Washington, D.C., respondent. Laurence Henry Tribe, Cambridge, Mass., respondents, Corp., [Amicus Curiae Information pages 161-162 intentionally omitted] Justice REHNQUIST delivered opinion Court. 1 Respondents Corporation (BNE), Hartford National (HNC), Boston (BBC) than ones principally located. Petitioners Northeast Bancorp, Inc., Union Trust Company, Citicorp these Board. Appeals Second Circuit affirmed orders sought certiorari, 1956, 70 Stat. 133, amended, 12 U.S.C. § 1841 seq., Act, permitted case We granted certiorari because importance issues, 469 810, 776, 83 772, we now affirm. 2 (BHCA), regulates national companies. generally defines institution organized law "(1) accepts deposits depositor legal right withdraw demand, (2) engages making commercial loans." 1841(c). corporation, partnership, trust, association, organization owns company. §§ 1841(a)(1), (b); see 1841(a)(5). Before become company, substantially all assets 1842. 3 will evaluate transaction anticompetitive effects, financial managerial resources, needs, like. 1842(c). addition, 1842(d), known "the Amendment," assets, Pursuant recently enacted selectively authorize basis. This us consider validity 4 From 1972, had completely barring requisite statute. Beginning several passed permitting circumstances specialized purposes. For example, Iowa grandfathering owning maintain expand activities, Code 524.1805 (1983); Independent Bankers Gover nors, 167 U.S.App.D.C. 286, 511 1288, cert. denied, 423 875, 144, 46 106 (1975); Washington purchasers failing banks, Wash.Rev.Code 30.04.230(4)(a) (Supp.1985); Delaware set special card operations, so long compete respects locally controlled full-service Del.Code Ann., Tit. 5, 801 seq. (Supp.1984). 5 December 1982, geographic regions. (Connecticut, Hampshire, Rhode Island, Vermont), directly indirectly corporation England, establish Massachusetts-based Mass.Gen.Laws ch. 167A, (West 1984). 1983, followed suit adopting 1983 Conn.Pub.Acts 83-411. 6 taken different courses acted. May similarly region, this limitation expire 30, 1986, after authorization extend nationwide subject reciprocity requirement. R.I.Gen.Laws 19-30-1 Since February 1984, Maine organizations Me.Rev.Stat.Ann., 9-B, 1013 (Supp.1984-1985). At extreme, Vermont releasing 7 One predictable regionally restrictive apparently be growth multistate can established giants York, California, Illinois, Texas. See 203, 209, n. 16 prompted least 15 legislation which, according regions Fed.Res.Bull. 374, 375-376 (1984). seven already necessary 8 Two months BNE merger respondent CBT (CBT), thereby N.A., Hartford, Connecticut. Soon thereafter HNC Arltru (Arltru), Arlington Lawrence, Massachusetts. Finally BBC successor Colonial Waterbury, 9 offers services consumers businesses nationally through nonbank subsidiaries. response Board's invitation comments interested persons three submitted opposing them. petitioner competes owned CBT, Colonial. York agreed enacts enabling legislation. BNE's CBT. 10 petitioners applications part ground did them, grounds They claimed, therefore, valid required Amendment. rejected arguments. It first determined BNE-CBT BBC-Colonial HNC-Arltru was therefore prevent transactions. 11 then challenge two doing so, noted hold unconstitutional there "clear unequivocal evidence" unconstitutionality. 353, 354 (1984); id., 376; 524, 525-526 While stating issue free doubt," concluded standard met. Fed.Res.Bull., 376-377. Interpreting statutory should read renunciation interest regulating companies." Id., 380. eliminated objection also found nothing suggest states choose enter, entry." 386. disposed reasoning restriction "rationally related attempt system responsive needs England." 381. analyzed transactions light relevant considerations out 1842(c) 1843(c)(8) applications. 1848, "[a]ny party aggrieved order Board" seek court appeals, 1850, parties Citibank, Northeast, petitioned acquisition. Citibank acquisition, intervene. petitions stayed pending expedited review. Meanwhile, petition filed petitions. BBC, BNE, HNC, Connecticut, Commonwealth respects. determination satisfied terms challenges mandate ordered status quo maintained disposition 14 1842(d). Clearly deal must invalid matter law. If type imposed general prohibition blend together arguments about meaning Const., Art. I, 8, cl. 3, think contentions best treated separately. resolved concluding sort itself expert issues raised, nonetheless authoritative voice Securities Industry Assn. Governors System, 468 207, 104 3003, 82 158 higher when whether authorization" selective undertake do. Whether stringent applicable, correct fact met case. done Maine. example circumstances, types certain region. On hand, alternatives: leave "does appear face discrimination" "to test explicitness laid down by" cases. 384. resolve agree supplies sufficient indication intent. 17 time branch prohibited McFadden Act. 36(c). device, however, created get around restriction. A purchase localities both major eliminate loophole. H.R.Rep. 609, 84th Cong., 1st Sess., 2-6 (1955); 101 Cong.Rec. 4407 (1955) (remarks Rep. Wier); 8028-8029 Patman); 102 6858-6859 (1956) Sen. Douglas). As House 1955, contained flat makes clear policies responsiveness inspired ban. A2454 8030-8031 Rains); supra, 2-6. 18 added floor Senate. Its entire confined Senate debate. individual legislators carry substantial weight, especially reflect consensus objectives though necessarily wisdom instant situation where legislator, even sponsor, odds traditionally more indicators intent conference committee reports. 19 bill reported Committee Banking Currency conditioned approach favored many large further expansion, see, e.g., Control Companies, 1955: Hearings S. 880 Subcommittee Currency, 132, 136 (testimony Ellwood Jenkins, First Stock Corp.), 298-299 (Baldwin Maull, Marine Midland 320 (Cameron Thomson, Northwest Bancorporation), cf. 375, 385 (Frank N. Belgrano, Jr., Transamerica thought total offensive States' rights, 6752 Robertson, manager bill, Maybank). 20 compromise extremes accommodated rights concern: 21 "Our amendment prohibit purchasing purchases out-of-State States." 6860 22 Accord, ibid. Bennett opposition Amendment). 23 Of central concern litigation, simply choice way other—either permit bar banks—but approach. Senator explained his "only degree expressly them." 6858. contend phrase degree" quantitative reference mean could Petitioners' contention, refuted analogy drawn 36(c): 24 "The proceeded very rapidly 1920's, check various limiting, cases preventing it, Illinois. previously implicitly branches, strong movement remove open field banks. This, done. Instead, measures, branches authorities. 25 "I say what our aims same provisions apply Act—namely, them; provision Act." Ibid. 26 6860. 27 1927, relaxed restrictions subjected them branching Walker & Co., 252, 258, 87 492, 496, 343 (1966). desirability States," ibid., 'in banking, extent banking.' 259, S.Ct., 496 (quoting Glass, 76 2511 (1933)). offer all-or-nothing respect observed, intrastate others like Illinois altogether. 28 variative nicely illustrated structure described follows: "In divided zones. Branch zones, zone." 6858 (1956). time, Pennsylvania contiguous counties. Upper Darby Myers, 386 Pa. 12, 124 A.2d 116 Douglas' explanation conclusion 29 Not anticipation differing approaches broader underlying whole particular retain Faced growing competition lines, alternative expansion borders unimpeded General Assembly Commission 1979 study problem. concluded: 30 "Both levels philosophy regulation promote pluralistic system—a comprised units, rather highly concentrated made few promotion ownership preservation communities credit. To essential health economy pass hands immediately interests citizens not, believe, serve well. Similarly, expose smaller rigors unlimited organizations—particularly deregulation products level putting strains resources wise." Report (Jan. 1983), App. 84-4047 (CA2), pp. 1230, 1240-1241. 31 Rather, "an experiment banking" step toward full "would afford legislature opportunity make own calculus benefits detriments result program banking." 1241-1242. adopted Commission's recommendations, believe Connecticut's precisely 32 33 burdens while flow among numerous citations prove Framers Constitution break forestall economic "Balkanization" confederations detriment welfare whole. See, H.P. Hood Sons, Inc. Du Mond, 336 525, 533, 69 657, 662, 93 865 (1949); Hughes Oklahoma, 441 322, 325-326, 99 1727, 1730-1731, 60 250 (1979); Federalist Nos. 22, 62-63, 143-145 (Rossiter ed. 1961). There little dispute group establishing excluding remained silent subject. Lewis BT Investment Managers, 447 27, 39-44, 100 2009, 2017-2019, 64 702 (1980). serious acting entirely authority run afoul comprehensively regulate Sporhase Nebraska ex rel. Douglas, 458 941, 3456, 73 1254 (1982). 34 But Here dormant, body latter violative When chooses, Western Southern Insurance Equalization, 451 648, 653-654, 2070, 2075, 68 514 (1981); White Council Construction Employers, 460 204, 103 1042, 75 South-Central Timber Development, Wunnicke, 467 82, 2237, 81 71 fails. 35 exclude violates it. doubt amounting compact. require impose limitation, legislatures establishment evidence cooperation legislators, officials, bankers, studying idea lobbying classic indicia missing. No joint purpose. Neither action modify repeal unilaterally. Most importantly, reciprocation limitation. based drop included ostensible theory, yet exclusion strenuously object plans years. 36 assume every 537 (1893). 701 (1976), U.S., 734. 38 Steel Corp. Multistate Tax Comm'n, 434 452, 471, 98 799, 812, 54 682 (1978). 39 conflict Deposit arrange 1823(f), pre-empted argument academic. assert alleged impermissibly offends sovereignty sister England. how "impact structure." 473, 813. 40 argued Amdt. 14, 2, admitting others. claim abandoned briefs merits, decision 751 (1985), supplemental brief urging issue. Because fully reviewed undoubtedly cloud elect decide 41 held encouraging new domestic insurance capital investment governmental securities standing alone, legitimate permissibly furthered corporations. said: 42 "This involve question, dissent suggests, post, 1693, broad economy. accomplished imposing discriminatorily taxes nonresident solely nonresidents." 882, 1684, 10. 43 question—Massachusetts Connecticut—are favoring domiciled country, said "discriminate" latter. write clean slate; B.T. 38, 2016, "banking activities profound concern." statement recognition historical country widely dispersed western nations dominated handful centralized 15,000 attached greater lesser recommended adoption combine 1239-1241. debates Legislature preceding evince immediate Pet. Cert. A157-A160. motivated Legislature. 44 spurred enact here challenged, Alabama Metropolitan, claims Fourteenth Barry Barchi, 443 55, 67, 2642, 2650, 61 365 Vance Bradley, 440 93, 97, 939, 942, 59 171 (1979). 45 judgment Affirmed. 47 POWELL took O'CONNOR, concurring. 49 I separately note meaningful distinction uphold today (1985). 50 distinguishes neighboring me why less discriminatory Alabama's scheme taxing slightly rate. tolerate "home team" condemns team." 878, 1682. 51 emphasizes slate "of Ante, 177. uniquely concern. Prudential Benjamin, 328 408, 415-417, 66 1142, 1147-1148, 90 1342 (1946). Both industries historically regulated critical play securing well-being businesses. 888-893, 1687-1690 (dissenting opinion). since 1851. Like nature firmly ensconced 888-889, 1687-1688. McCarran-Ferguson 1945, states: 52 "Congress hereby declares continued taxation public interest, silence construed barrier 33, 1011. 53 having purpose: credit." 178. preserving institutions cornerstone defense tax. survives "15 additional purposes" remanded reconsideration. 875-876, 1680, 5. Especially sanctioned barriers fostering engender, invalidate classifications designed encourage contributions. Today's longstanding doctrine groups legitimately different—as often are—in ways proper goals

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