Recent Development by A.J. Herbert III
Deposit Guaranty National Bank (Deposit Guaranty), a federally chartered banking corporation with its principal office in Jackson, Mississippi, applied to the Comptroller of the Currency (Comptroller) for permission to establish a branch office in Gulfport, Mississippi. Gulfport is more than 100 miles distant from Jackson. During the following public comment period, the Department of Banking and Consumer Finance of the State of Mississippi (Department of Banking) advised the Comptroller that approval of the proposed branch would violate Mississippi law. The Comptroller, however, determined that savings associations in Mississippi (which are allowed to branch statewide) were engaged in the ‘business of banking,’ and were therefore ‘state banks' within the meaning of section 36(h) of the National Bank Act. The Comptroller thus approved Deposit Guaranty's application, concluding that since Mississippi savings associations were state banks and are allowed to branch statewide, national banks in Mississippi could also branch statewide. The Department of Banking responded by filing suit in federal district court to enjoin the opening of the approved branch, and several state banks were allowed to intervene as plaintiffs. The district court found that the Comptroller's decision would give national banks in Mississippi a competitive advantage over state commercial banks, which were geographically restricted by statute. The requested injunctive relief was therefore granted. On appeal by the Comptroller and Deposit Guaranty, the Fifth Circuit reversed the district court and vacated the injunction, holding that the Comptroller had properly used federal law to define the terms of the National Bank Act and had correctly concluded that state savings associations were ‘state banks' engaged in the business of banking within the meaning of that Act. National banks, including Deposit Guaranty, were thus entitled to branch statewide in Mississippi. Department of Banking and Consumer Finance v. Clarke, 809 F.2d 266 (5th Cir.), cert. denied, 107 S. Ct. 3240 (1987).
About the Author
A.J. Herbert III.
Citation
62 Tul. L. Rev. 641 (1988)