Arkansas State Bank Com'r v. Resolution Trust Corp., s. 90-2115

• Citation: 911 F.2d 161
• Decision Date: 28 August 1990
• Docket Number: Nos. 90-2115,90-2116 and 90-2194,s. 90-2115
• Parties: ARKANSAS STATE BANK COMMISSIONER, Appellee, v. The RESOLUTION TRUST CORPORATION, an agency of the United States; The Federal Deposit Insurance Corporation, an agency of the United States; Appellants, and Robert L. Clarke, in his official capacity as the Comptroller of the Currency of the United States, and The Arkansas Independent Bankers Association, Inc., a Non-Profit Arkansas Corporation; (Intervenor below) Appellee, and Worthen Bank & Trust Company, N.A. (Intervenor below). ARKANSAS STATE BANK COMMISSIONER, Appellee, v. The RESOLUTION TRUST CORPORATION, an agency of the United States; The Federal Deposit Insurance Corporation, an agency of the United States; and Robert L. Clarke, in his official capacity as the Comptroller of the Currency of the United States, and The Arkansas Independent Bankers Association, Inc., a Non-Profit Arkansas Corporation; (Intervenors below) Appellee, and Worthen Bank & Trust Company, N.A., (Intervenor below) Appellant. ARKANSAS STATE BANK COMMISSIONER, Appellee, v. The RESOLUTION TRUST CORPORATION, an agency of the United States; The Federal Deposit Insurance Corporation, an agency of the United States; and Robert L. Clarke, in his official capacity as the Comptroller of the Currency of the United States, Appellant, and The Arkansas Independent Bankers Association, Inc., a Non-Profit Arkansas Corporation; (Intervenor below) Appellee, and Worthen Bank & Trust Company, N.A., (Intervenor below).
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 161

911 F.2d 161

59 USLW 2153

ARKANSAS STATE BANK COMMISSIONER, Appellee, v. The RESOLUTION TRUST CORPORATION, an agency of the United

States; The Federal Deposit Insurance

Corporation, an agency of the United

States; Appellants,

and

Robert L. Clarke, in his official capacity as the

Comptroller of the Currency of the United States,

and

The Arkansas Independent Bankers Association, Inc., a

Non-Profit Arkansas Corporation; (Intervenor

below) Appellee,

and

Worthen Bank & Trust Company, N.A. (Intervenor below).

ARKANSAS STATE BANK COMMISSIONER, Appellee, v. The RESOLUTION TRUST CORPORATION, an agency of the United

States; The Federal Deposit Insurance Corporation, an

agency of the United States; and Robert L. Clarke, in his

official capacity as the Comptroller of the Currency of the

United States,

and

The Arkansas Independent Bankers Association, Inc., a

Non-Profit Arkansas Corporation; (Intervenors

below) Appellee,

and

Worthen Bank & Trust Company, N.A., (Intervenor below) Appellant.

ARKANSAS STATE BANK COMMISSIONER, Appellee, v. The RESOLUTION TRUST CORPORATION, an agency of the United

States; The Federal Deposit Insurance

Corporation, an agency of the United States;

and

Robert L. Clarke, in his official capacity as the

Comptroller of the Currency of the United States, Appellant,

and

The Arkansas Independent Bankers Association, Inc., a

Non-Profit Arkansas Corporation; (Intervenor

below) Appellee,

and

Worthen Bank & Trust Company, N.A., (Intervenor below).

Nos. 90-2115, 90-2116 and 90-2194.

United States Court of Appeals Eighth Circuit.

Submitted Aug. 15, 1990.

Decided Aug. 28, 1990.

Dorothy L. Nichols, Washington, D.C., for Resolution Trust and Herman Ivester, Little Rock, Ark., for appellant.

Leonard Rubin, Washington, D.C. and Jeannette Denhammcclendon, Asst. Atty. Gen., Little Rock, Ark., for appellee.

Before JOHN R. GIBSON and MAGILL, Circuit Judges, and HEANEY, Senior Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

The issue before us is the validity of a regulation adopted by the Resolution Trust Corporation, 55 Fed.Reg. 22,323 (to be codified at 12 C.F.R. Sec. 1611.1), that permits banks making emergency acquisitions of failed or failing thrifts under 12 U.S.C.A. Sec. 1823(k) (West 1989) to retain and operate branches of the thrifts as bank branches. The RTC issued an order under the regulation to override the branch bank restrictions of Arkansas law with respect to the bid of Worthen Bank & Trust Company to purchase Independence Federal Bank, FSB. The district court held the regulation to be invalid, finding that the statute referred only to the ability of savings associations to operate branches and not to the ability of a bank to retain and operate the branches. We are convinced that the regulation is based on a permissible construction of the underlying statute, and we reverse the judgment of the district court.

The facts giving rise to this controversy are simple, and we recite them essentially as stated in the district court order. On February 13, 1990, the RTC held an instructional bid meeting to provide information about two savings and loan associations to be offered for sale. The RTC representative explained that its reading of 12 U.S.C.A. Sec. 1823(k), a part of the comprehensive Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, 1989 U.S.Code Cong. & Admin.News (103 Stat.) 183 authorized the RTC to preempt Arkansas restrictions on branch banking by an acquiring bank. The RTC informed the Arkansas State Bank Commissioner that it was willing to file a declaratory action, but a few days later announced that it had scheduled another bid meeting for February 27, 1990. The Commissioner on February 23, 1990 filed this action seeking emergency declaratory relief, a temporary restraining order, and a preliminary injunction to prevent the RTC's announced intention to preempt or override the Arkansas branch bank law. After a hearing before the district court, the RTC cancelled the bid meeting. On June 8, 1990, the RTC held another bid meeting. On June 21, 1990, Worthen submitted a bid for certain assets and liabilities as well as the twenty branch offices of Independence. Worthen conditioned its bid on the RTC taking action to override the Arkansas branch banking law so it could operate Independence's twenty branch offices located in fifteen counties throughout Arkansas as branch banks of Worthen. Worthen submitted the sole bid for Independence as a complete entity. Nineteen other bids were submitted for various combinations of the branches, but not all of the branches were covered by the separate branch bids. Worthen's bid included a premium of $1,500,001 for acquiring all of the branches together. Several of the separate branch bids also requested an override of the state banking law.

The activity in Arkansas coincided with action on the regulatory front. On April 19, 1990, the RTC published a notice that it proposed to adopt a rule permitting banks to retain and operate branches of failed or failing thrifts as banks. 55 Fed.Reg. 13,543 (1990) (to be codified at 12 C.F.R. Sec. 1611.1) (proposed April 11, 1990). ¹ On May 24, 1990, the RTC board of directors adopted the proposed regulation. It was effective June 1, 1990. 55 Fed.Reg. 22,323.

The Arkansas laws the RTC plans to override would prohibit Worthen from operating the Independence branches as banks unless each was separately chartered. Ark.Stat.Ann. Sec. 23-32-1202 (Michie Supp.1989). The statutes provide that no bank shall engage in the business of banking at any location other than at a principal banking office or at a full service branch bank approved by supervisory banking authority. Id. Banks are allowed to establish full service branches anywhere within the county in which the principal banking office is located, or at any former principal banking office. Ark.Stat.Ann. Sec. 23-32-1202(b). These limitations are being phased out. In 1994, banks may locate one or more full service branches within contiguous counties, and, beginning in 1999, they will be able to locate one or more branches anywhere in the state. ² The Commissioner is authorized to approve applications for branches by an order containing findings of fact and conclusions of law with certain specified required findings. ³

After the Commissioner withdrew his motion for a preliminary injunction in the district court, the court granted the Independent Bankers Association of the State of Arkansas the right to intervene. After receiving notice of the RTC's intent to override Arkansas law, the Commissioner and Independent Bankers filed motions for a temporary restraining order and preliminary injunction, and Worthen filed motions for a preliminary injunction and declaratory relief. The RTC moved to dismiss the complaints of the Commissioner and Independent Bankers, as did the Federal Deposit Insurance Corporation and Comptroller of the Currency.

The district court, after conducting another hearing, commented that the statutes in question stated nothing about the operation of branches, or a bank converting branches to bank branches and so operating them. Arkansas State Bank Commissioner v. Resolution Trust Corp., 745 F.Supp. 550, 553 (E.D.Ark.1990). The court observed that the Commissioner's and Independent Bankers' argument that the override power of the statute extends only to the acquisition of the branches and not to their operation appears overly restrictive. The court stated, however, that when read with 12 U.S.C.A. Sec. 1823(k)(4)(A), their argument became more tenable. Id. at 9. After looking to two district court decisions in Colorado and New Mexico and acknowledging the rule of the Supreme Court of the United States in Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), the court turned to a detailed analysis of the statutes, and particularly to the branching provisions in paragraph (k)(4). The court concluded:

It is obvious to this Court that Section (k)(4) means that after an acquisition, existing branches may be retained and operated if they are maintained and operated as branches of a savings association. This Court agrees with the Colorado District Court that they cannot be retained and operated as branches of the acquiring bank.

Arkansas State Bank Comm'r, slip op. at 12.

The court rejected arguments that the McFadden Act, 12 U.S.C.A. Sec. 36 (West 1989), was also a barrier to the action of the RTC in adopting the regulation. While recognizing the broad authority of agencies of the United States government, the court further stated:

At the same time, the Court is equally convinced that in this case RTC, in issuing its Override Rule, clearly overstepped its authority pursuant to the language of the statute under which it was acting.... [T]he RTC cannot by regulation amend FIRREA to add provisions that are not there, any argument ab inconvenienti to the contrary, notwithstanding. Accordingly, plaintiff's and intervenor Independent Bankers' request for declaratory and injunctive relief is granted.

Arkansas State Bank Comm'r, slip op. at 13-14.

The court granted declaratory and injunctive relief to the Commissioner and Independent Bankers. It declared 12 C.F.R. Sec. 1611.1 null and void for exceeding the RTC's authority, and it enjoined appellants from approving branch banks in violation of Arkansas branch banking laws. It also denied the motions to dismiss filed by the various parties. This appeal followed; we expedited briefing and oral arguments.

I.

Worthen's proposed acquisition of Independence and its twenty branches is authorized under 12 U.S.C.A. Sec. 1823(k)(1)(A), and it is the interplay of this provision with 12 U.S.C.A. Sec. 1823(k)(4), relating to branching that is the center of the controversy as to whether RTC's promulgation of 12 C.F.R. Sec. 1611.1 finds statutory authorization. "Notwithstanding any provision of state law," upon...