Opposition Brief — Citicorp v. Board of Governors of the Federal Reserve System

o~

Toifice - Supreme Court, U

ILE

(t% )

No. 84-754 ~~

Supreme Court of the United

October Term, 1984

CITICORP,

Petitioner,

—against—

THE BOARD OF GOVERNORS OF

THE FEDERAL RESERVE SYSTEM,

Respondent,

—and—

BANK OF BOSTON CORPORATION, THE STATE OF

RHODE ISLAND, and RIHT FINANCIAL CORPORATION,

Intervenor-Respondents.

CITICORP, a

Petitioner,

—against—

THE BOARD OF GOVERNORS OF

THE FEDERAL RESERVE SYSTEM,

—and—

FLEET FINANCIAL GROUP, INC.,

Intervenor-Respondent.

Respondent,

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Second Circuit

BRIEF OF INTERVENOR-RESPONDENT FLEET

FIN ANCIAL GROUP, INC. IN OPPOSITION TO PETITION

Of Counsel: WILLIAM G. DELANA*

EDWARD W. DENCE, JR. ALLAN B. TAYLOR

WILLiaM C. MUTTERPERL J. BRUCE BOISTURE

Day, Berry & HOWARD

CityPlace

Hartford, CT 06103-3499

(203) 275-0100

*Counsel of Record = for —

Financial Group, Ine.

QUESTIO* S PRESENTED

1. Does Section 3(d) of the Bank Holding Company Act

(12 U.S.C. §1842(d)), which explicitly provides for unquali-

fied deference to state laws authorizing interstate bank

acquisitions, permit a state to adopt legislation allowing

the acquisition of banks within its borders by bank holding

companies located in specified other states adopting sim-

ilar legislation?

2. Is such state legislation, enacted under the authority

expressly granted by Congress in Section 3(d) of the Bank

Holding Company Act, consistent with the Compact

Clause of the Constitution?

TABLE OF CONTENTS

Questions Presented.............

Table of Authorities.............

Reasons For Denying the Petition

RS ie ia os ln § Cc a Ob.

iv

TABLE OF AUTHORITIES

Cases:

Iowa Independent Bankers v. Board of Governors,

511 F.2d 1288 (D.C. Cir. 1975), cert. denied 423

ES 6.4 5 Xs ce when daend bee vehewnnes ee

Northeast Bancorp, Inc. v. Board of Governors of the

Federal Reserve System, 740 F.2d 203 (2d Cir.

1984), petition for cert. filed, 58 U.S.L.W. 3189

(U.S. Sept. 25, 1984) (No. 84-363) .............

South-Central Timber Dev., Inc. v. Wunnicke,

52 U.S.L.W. 4631 (U.S. May 22, 1984) (No.

RR De pen tee Caneariey Betiny ery Conny

Southern Pacific Co. v. Arizona, 325 U.S. 761

i eg an a

Western & Southern Life Ins. Co. v. Board of Equal-

szation, 451 U.S. G48 (1961). ... cece se seee

Statutes:

Se I ir vc csv ccnencasewapwasubene

SL, PR ic Gieneehatepeeaee svete

Mass. Gen. Laws Ann. ch. 167A §2 (West 1984)....

PAGE

a)

IN THE

Supreme Court of the United States

October Term, 1984

No. 84-754

CITICORP,

Petitwomer,

—against —

THE BOARD OF GOVERNORS OF

THE FEDERAL RESERVE SYSTEM,

—

BANK OF BOSTON CORPORATION, THE STATE OF

RHODE ISLAND, and RIHT FINANCIAL CORPORATION,

Intervenor-Re

CITICORP, a

Petitioner,

—against —

THE BOARD OF GOVERNORS OF

THE FEDERAL RESERVE SYSTEM,

——

FLEET FINANCIAL GROUP, INC.,

Intervenor- Respondent.

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Second Circuit

BRIEF OF INTERVENOR-RESPONDENT FLEET

FINANCIAL GROUP, INC. IN OPPOSITION TO PETITION

Respondent Fleet Financial Group, Inc., which was an

intervenor in the court below, submits this brief in opposi-

tion to the petition for certiorari filed by Citicorp

(“Petition”).

1. Fleet Financial Group, Inc. has no parent company, no affiliates, and

no partly owned subsidiaries.

STATEMENT OF THE CASE

Fleet Financial Group, Inc. (“Fleet”), a Rhode Island bank

holding company, applied to the Federal Reserve Board

(“Board”) in May 1984 for permission to acquire two newly

established national banks. One of these new banks, to be

located in Hartford, Connecticut, was to be acquired pursu-

ant to Connecticut’s interstate banking law, 1983 Conn. Acts

83-411 (“Connecticut Act”). The other new bank, planned for

Boston, Massachusetts, would be acquired under the author-

ity of Mass. Gen. Laws Ann. ch. 167A §2 (West 1984) (“Mas-

sachusetts Act”).

The Board approved Fleet’s application on October 4,

1984. (Petition, Appendix D.) In its order, the Board noted

that while Fleet’s application raised the same legal issues

that the Board had addressed in three earlier rulings, the

Board’s decisions in those rulings approving interstate

acquisitions pursuant to the Connecticut Act and the Massa-

chusetts Act had since been upheld by the United States

Court of Appeals for the Second Circuit. (See Petition,

Appendix D, 21-22.) On that basis, the Board approved

Fleet’s acquisition of the two de novo banks.

After Citicorp filed a petition for review of the Board’s

order by the Second Circuit, Fleet, Citicorp and the Board

entered into a stipulation regarding the case. The stipula-

tion, reprinted as Appendix B to the Petition, reflects the

acknowledgement by the parties that this case raises the

same issues as those previously decided by the Second Cir-

cuit in Northeast Bancorp, Inc. v. Board of Governors of the

Federal Reserve System, 740 F.2d 203 (2d Cir. 1984), petition

for cert. filed, 53 U.S.L.W. 3189 (U.S. Sept. 25, 1984) (No.

84-363) (“Northeast”).

Contrary to the implication in the Petition (Petition, 8),

however, Fleet did not agree in the stipulation that review of

this case by this Court is warranted, nor did it agree to stay

the consummation of its proposed transactions pending

review of this case by this Court. Rather, Fleet agreed to

postpone its acquisition of its two new banks only until this

Court disposes of the Northeast case. It continues to be

— ow

Fleet’s position, as stated infra, that neither the Northeast

case nor this case warrants review by this Court.

The Second Circuit, based on the parties’ stipulation,

affirmed the Board’s order but stayed its mandate pending

this Court’s disposition of Northeast. The stay will be vacated

and the Second Circuit’s mandate issued immediately if (a)

the petition for certiorari in Northeast is denied, (b) the

Second Circuit’s judgment in Northeast is affirmed, or (c)

the stay of the mandate of the Second Circuit in Northeast is

vacated by this Court.

REASONS FOR DENYING THE PETITION

The Petition should be denied for the reasons stated in the

several briefs in opposition filed in Northeast, particularly

the brief of the Solicitor General in opposition to the petition

in that case. As stated in those briefs in opposition, the

decisions of the Second Circuit in the present case and in

Northeast are consistent with both the legislative history?

and the prior judicial interpretation’ of the Douglas Amend-

ment,‘ the federal statute at the heart of this case. Far from

encroaching on the supremacy of the United States, the

Connecticut Act and Massachusetts Act represent exercises

of an authority granted to the states by Congress and hence

present no important question under the Compact Clause.

There is no conflict among the courts of appeals regarding

the proper resolution of the questions presented.

In supplementing the oppositions already filed in

Northeast, Fleet wishes to emphasize two points. First, the

Petition presents no issue under the Commerce Clause.

There is no dispute in this case regarding the authority of

Congress to permit the states to regulate interstate com-

merce in ways that would not be permissible absent such

congressional approval. South-Central Timber Dev., Inc. v.

Wunnicke, 52 U.S.L.W. 4631 (U.S. May 22, 1984) (No. 82-

2. See Solicitor General’s Opposition to Certiorari in Northeast, at 6-10.

3. Iowa Independent Bankers v. Board of Governors, 511 F.2d 1288

(D.C. Cir.), cert. denied, 423 U.S. 875 (1975).

4. Section 3(d) of the Bank Holding Company Act, 12 U.S.C. §1842(d).

1608), at 4632; Southern Pacific Co. v. Arizona, 325 U.S.761,

769 (1945). Congress has taken just such a step in adopting

the Douglas Amendment, which provides in relevant part

that the Board may approve interstate acquisitions of banks

by bank holding companies in any case in which such an

acquisition “is specifically authorized by the statute laws of

the State in which such bank is located... .” 12 U.S.C.

§1842(d).

The only question presented by this petition is one of

statutory interpretation: Do the Connecticut Act and the

Massachusetts Act fall within the scope of the authority

delegated to the states in the Douglas Amendment? Cf. West-

ern & Southern Life Ins. Co. v. Board of Equalization, 451

U.S. 648, 652-653 (1981) (congressional grant of authority to

the states, under McCarran-Ferguson Act, removed Com-

merce Clause limitations on state regulation of insurance

business and left as the only issue whether actions taken by a

state were consistent with the Act). This question, correctly

answered in the affirmative by the Second Circuit, does not

warrant review by this Court, particularly in the absence of

any conflict among the courts of appeals.

Second, the letter of Representative Rodino, quoted at

length in the Petition (Petition, 9-11), merely highlights one

of the reasons that this petition should be denied. As the

letter makes clear, in its term just ended, Congress consid-

ered the adoption of federal legislation that would have

given specific approval to regional interstate banking

statutes such as the Connecticut Act and the Massachusetts

Act. While Mr. Rodino certainly appears to have opposed the

enactment of such a law, the sentiments of his colleagues in

the House of Representatives were never tested on this point.

The proposal, embodied in a bill approved by the Senate by a

vote of 89 to 5, was never brought to a vote in the House.

The Senate bill (S. 2851), an omnibus banking regulation,

included provisions dealing not only with interstate banking

but also with securities and insurance powers of banks and

bank holding companies, permissible activities of savings

and loan holding companies, the payment of interest on

certain reserves maintained with the Federal Reserve, bro-

kered deposits, “non-bank” banks, and other topics. The fail-

ure of Congress to enact this comprehensive banking

legislation, of which the interstate banking provision was

only one of many elements, does not in any way support

Citicorp’s conclusion that the Second Circuit erred in its

interpretation of the Douglas Amendment. Rather, this

topic, like so many others having to do with the banking

industry, is unfinished congressional business that may be

addressed in the next session of Congress. As noted in the

Solicitor General’s opposition to the petition in Northeast,

the current congressional interest in revising the legislation

that this Court would be construing if it reviewed the Second

Circuit’s decision counsels denial of the petition.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

Of Counsel: WILLIAN G. DELANA*

EDWARD W. DENCE, JR. ALLAN B. TAYLOR

WILLIAM C. MUTTERPERL J. BRUCE BOISTURE

Day, Berry & Howarp

City Place

Hartford, CT 06103-3499

(203) 275-0100

*Counsel of Record Counsel for Intervenor-

Respondent Fleet Financial

Group, Inc.