Legal Document

474 U.S. 361 106 S.Ct. 681 88 L.Ed.2d 691 BOARD OF GOVERNORS the FEDERAL RESERVE SYSTEM, Petitionerv.DIMENSION FINANCIAL CORPORATION et al. No. 84-1274. Argued Nov. 4, 1985. Decided Jan. 22, 1986. Syllabus Section 2(c) of Bank Holding Company Act 1956 defines "bank" as any institution "which (1) accepts deposits that depositor has a legal right to withdraw on demand, and (2) engages in business making commercial loans." In response increase number arguably uncovered "nonbank banks"—such institutions offering customers "NOW" (negotiable order withdrawal) accounts, which function like traditional checking accounts but are subject seldom exercised bank require prior notice withdrawal, "commercial loans substitutes" such certificates deposit paper—the Federal Reserve Board amended its "Regulation Y" redefine "as matter practice" payable demand "any loan other than an individual for personal, family, household, or charitable purposes," including "the purchase retail installment paper, deposit, bankers' acceptances, similar money market instruments." consolidated cases challenging Regulation Y, Court Appeals set aside regulation. Held: The did not act within statutory authority defining "banks" it did. Pp. 366-375. (a) Board's definition "demand deposit" is accurate reasonable interpretation § Act. An offers NOW accounts—even if lending—is purposes because requirement withdrawal withholds from "legal right" demand. No amount agency expertise can make words contained mean do something practice." 367-368. (b) Nor loan" 2(c), under institution, even unless "engages term used financial community describe direct customer purpose providing funds needed by business. Money transactions, characterizes substitutes," fall commonly accepted Nothing language legislative history indicates meant anything different ordinary usage. 368-373. (c) new cannot be supported asserted basis falls Act's "plain purpose" regulating "functionally equivalent" banks. legislation determined first instance with reference plain statute itself. Here, rather functional equivalent banking services, Congress defined specificity certain transactions constitute may imperfect, no power correct flaws perceives empowered administer. Its rulemaking limited adopting regulations carry into effect Congress' will expressed statute. 373-375. 744 F.2d 1402 (1984), affirmed. BURGER, C.J., delivered opinion Court, all Members joined, except WHITE, J., who took part consideration decision case. Michael Bradfield, Washington, D.C., petitioner. Jeffrey S. Davidson, respondents, Dimension Financial Corporation, John D. Hawke, Jr., American Services, Chief Justice BURGER Court. 1 We granted certiorari decide whether acted 1956, 12 U.S.C. 1841 seq., purposes" CFR 225.2(a)(1) (1985). 2 * A. 3 70 Stat. 133, amended, 1841(c). 4 This case about so-called banks"—institutions offer services those banks until recently were regulation they conducted their so place themselves outside narrow found Many nonbank banks, example, conventional provisions technically give demand." 1841(c)(1). Others avoid classification limiting extension credit instruments paper. 5 1984, promulgated rules would thereafter regulated 49 Fed.Reg. 794. accomplished this amending bank, Y," two significant respects. First, include deposits, 225.2(a)(1)(A) Second, "making 225.2(a)(1)(B) B 6 Cases Y commenced three Circuits United States Tenth Circuit.1 both aspects (1984). court discuss detail, relying instead holding earlier Circuit case, First Bancorporation v. Governors, 728 434 Bancorporation, noted giving "a recognized "withdrawals actual practice permitted Id., at 436. But, since depository retains technical does not, "bank," accept "deposits 7 also concluded was odds revealed passing intended exempt whose only activity instruments. Although agencies must "able change meet conditions arising sphere authority," expansion jurisdiction come F.2d, 1409. Accordingly, invalidated regulations. 8 certiorari. 471 1064, 105 2137, 85 495 affirm. II 9 vests broad regulatory over companies "to restrain undue concentration resources prevent possible abuses related control credit." S.Rep. 91-1084, p. 24 (1970), U.S.Code Cong. & Admin.News 1970, pp. 5519, 5541. authorizes regulate company bank." 1841(a)(1). 10 breadth rests word "bank." gave simple bank: national association State savings trust company." 1841(c) (1964 ed.). Experience soon proved literal application had unintended consequence industrial account customers. These " 'funds public are, practice, repaid demand.' Amend 1956: Hearings 2253, 2418, H.R. 7371 before Subcommittee Senate Committee Banking Currency, 89th Cong., 2d Sess., 447 (1966) (letter J.L. Robertson, Member, Board). these "correct interpretation" statute, saw "no reason policy cover act." Ibid. agreed, accordingly 1966, demand."2 11 1966 unsatisfactory too included pose dangers system. Because one primary "restrain . credit," made little sense fact, engage loans. definition, excluding "engag[e] Since 1970 provided "(1) III 13 initiated respond banks.3 After hearing views interested parties, remaining reach regulations, have competitive advantage despite equivalence offered. proliferation threatens structure established enterprises. See 1843(c)(8) (bank nonbanking affiliate entity "closely banking"). Third, interstate acquisition undermines proscription without state approval. 794, 835-836 narrowed required elements present proceeded amend redefining test. turn now definition. 14 primarily accounts. A functions account—the write checks institution. however, nevertheless absolute withdrawal. Under reading institution—even full-scale provision closes loophole demand," 15 determining change, we begin, course, If clear unambiguous "that end matter, court, well agency, unambiguously intent Congress." Chevron U.S.A. Inc. Natural Resources Defense Council, Inc., 467 837, 842-843, 104 2778, 2781-82, 81 694 deference courts pay applied alter clearly Congress. 16 Application standard element extended analysis. By amendments expressly define meaning same But expertise—however sound result—can means just that: limitation. Institutions demand; rather, itself ultimate advance deposit," therefore, 2(c). 17 provides that, 18 is, extensions enterprises through loan. implementing order, explained "it proper scope out basic purposes: maintain impartiality business, conflicts interest, Fed.Reg., 841. 19 As characterization suggests,4 apply to, indeed distinguish, open involve close borrower-lender relationships. Cf. G. Munn F. Garcia, Encyclopedia Finance 607 (1983). latter undoubtedly indirect entities but, entail face-to-face negotiation between borrower lender, 20 common understanding reflected own decisions. Throughout 1970's exclude engaging transactions. For D.H. Baldwin Co., 63 Fed.Res.Bull. 280 (1977), although participated federal issued "technically 'banks' Act" 286. resembled should left whether, light policies underlying Act, 'near-banks' treated 'nonbanks.' 287. Fletcher Corp., 60 868, 869, n. (1974) (savings participate deemed Act). 1976, Legal Division broker call "do appear lender-borrower relationship characteristics Letter Greenspan P. Tuttle, Deputy General Counsel, 2-3 (Jan. 26, 1976) (App. 100A-101A). 1981 internal memorandum summarized longstanding definition: 21 "The nature, funds, (certificates bankers acceptances) considered section fact System, Office Correspondence (Feb. 10, 1981) 97A) (emphasis original).5 22 contends conforms original enacting provision. provision, argues, "technical amendment designed create narrowly circumscribed exclusion coverage." Brief Petitioner 41. supports revisionist view citing comment "legislative history" indicating time enacted, operated Boston Safe Deposit Trust Co. go far claim private bill, Safe. It suggests, prompted circumstances particular given meaning. 23 terms, exempts choice general demonstrates been needs class Furthermore, Report explained: 'bank' adopted engaged banking, credit. However, committee, accordingly, 'bank.' 25 lengthy journal article Representative Gonzalez entered Congressional Record. 116 Cong.Rec. 25846, 25848 (1970) (indicating "[v]irtually lending"). Such passage meaningful defeat actually chosen effectuate will. Finally, evidenced congressional Safe, expansive unreasonable At "make loans," Recognizing usage amendment, 1972 advised Act: 26 understands purchases 'money instruments,' acceptances. regarded Act." Lee J. Aubrey, Vice President, Boston, Greenspan, Assistant Secretary, (May 18, 1972) 94A). 27 history, loan," C 28 Unable support definitions Nonbank regulation, insists, read 'policy whole' negate legislation." legislation, contends, entities, banks.6 29 Richards States, 369 1, 9, 82 585, 590, 492 (1962). "broad expense specific ignores complexity problems called upon address dynamics action. unanimous stamp some vague social economic evil; differ sharply effectuating intent, final reflect hard-fought compromises. Invocation terms takes processes compromise and, end, prevents effectuation intent. 30 Without doubt there much said payment-on-demand accounts; recognize generally serve purpose. Rather statute.7 31 short safeguards desirable necessary protect problem Congress, courts, address. Numerous proposals reform advanced streamline tremendously complex area See, e.g., Blueprint Reform: Task Group Services (July 1984). Our inquiry, rest conclusion action inconsistent here, TVA Hill, 437 153, 194, 98 2279, 2301, 57 117 (1978), "[o]nce enactment discerned judicial process comes end." 32 Affirmed. 33 WHITE filed Appeal Fourth Sixth transferred pursuant 2112(a). explained, bill redefines (checking accounts), test nondeposit companies." 1179, (1966), 2385, 2391. 1980 large insurance, securities, industrial, organizations acquired Insurance Corporation insured powers previously unregulated "have substantially expanded them intents banks" 834. stated paper important substitute 840, 34. Citicorp, 69 921, 922 (1983) ("[C]ommercial substitutes acceptances sale funds"); Hurley, Commercial Paper Market, 525 (1977) credit"). decisions "represented willingness refrain applying full generate potential evasion." 842. mention self-imposed restraint. Rather, represented based passage. argument, 5(b), issue "necessary enable administer chapter evasions thereof." 1844(b). permits police boundaries Act; permit expand beyond times yield anomalies. confronted explicit produced curious result. Noting nothing prohibited unwise upheld enforcement written it. swiftly relief petitioner Hill; fashion could tailored courts. Pub.L. 95-632, 5, 92 3760.

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