This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
According to Petitioner, the case concerns whether the OCC’s Regulation 7.40006 preempts Michigan state law that historically regulated the non‑bank, state‑chartered operating subsidiaries of national banks.
Petitioner argues that the dual banking system of state and federal regulation is a long‑standing example of cooperative federalism and that the OCC’s rule disrupts the balance by depriving states of authority they have exercised for decades.
Background and question before the Court
What each side argues
Petitioner (Financial Services)
Petitioner contends that state regulation of non‑bank subsidiaries has been exercised prudently for 35 years and that the OCC’s rule improperly removes that authority.
Respondent (Wachovia Bank, N.A.)
According to Mr. LONG, respondent argues that there are multiple viable grounds for the case, including conflict preemption.
What happened at oral argument
Justice Scalia asked whether Michigan could simply tell the federal government to stay out of state regulation, highlighting the tension between state and federal authority.
According to Justice Breyer, justice Breyer inquired whether the regulation’s language indicated conflict preemption rather than field preemption.
According to Justice Stevens, justice Stevens questioned whether the state would retain visitorial power over a subsidiary that is part of a holding company rather than the bank itself.
Justice Ginsburg asked whether there is any practical difference in how the subsidiary operates as a corporation versus as a parent‑subsidiary structure.
What the Court decided
Why it matters
According to Petitioner, the outcome will affect the balance of power between state regulators and the OCC, potentially reshaping how national banks’ subsidiaries are supervised across the United States.
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 56c67b73177f1b88d603-r1-4f1bb12224c2f72f.pdforal argument transcript
Guide generated September 21, 2026. Automated validation accepted this version.