Dimension Financial Corp. v. Board of Governors of Federal Reserve System
| Decision Date | 24 September 1984 |
| Docket Number | 84-1011,84-1257,84-1122,Nos. 83-2696,84-1270 and 84-1407,s. 83-2696 |
| Citation | 744 F.2d 1402 |
| Parties | DIMENSION FINANCIAL CORPORATION, Daniel T. Carroll, Harold D. Dufek, William L. Mitchell, Ronald L. Shaffer, A. Gary Shilling, State of Ohio, Ohio Division of Savings and Loan Associations, Ohio Deposit Guarantee Fund, Horizon Savings and Loan Company, Horizon Service Corporation, Permanent Savings and Loan Association, Financial Institutions Assurance Corporation, First Bancorporation, Colorado Industrial Bankers Association, Fort Lupton Industrial Bank, Monroe Industrial Bank, Castle Rock Industrial Bank, Ark Valley Industrial Bank, Household Weld County Industrial Bank, Household Lamar Industrial Bank, Household Alamosa Industrial Bank, Household Valley Industrial Bank, Household Salida Industrial Bank, Copper State Thrift & Loan Company, and Copper State Financial Corporation, Petitioners, v. BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, Respondent, American Financial Services Association and Household Finance Corporation, Intervenors. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Jeffrey S. Davidson of Kirkland & Ellis, Washington, D.C., (Dennis M. Gingold, Washington, D.C., with him on brief), for petitioners Dimension Financial Corp., Daniel T. Carroll, Harold D. Dufek, William L. Mitchell, Ronald L. Shaffer and A. Gary Shilling.
John D. Hawke, Jr. of Arnold & Porter, Washington, D.C., for petitioners First Bancorporation, Colorado Indus. Bankers Ass'n, Fort Lupton Indus. Bank, Monroe Indus. Bank, Castle Rock Indus. Bank, Ark Valley Indus. Bank, Household Weld County Indus. Bank, Household Lamar Indus. Bank, Household Alamosa Indus. Bank, Household Valley Indus. Bank, Household Salida Indus. Bank, Copper State Thrift & Loan Co., Copper State Financial Corp., and intervenors American Financial Services Ass'n and Household Finance Corp.
Anthony J. Celebrezze, Jr., Atty. Gen., Connie J. Harris, Asst. Atty. Gen., State of Ohio, Columbus, Ohio, filed a brief on behalf of petitioners State of Ohio and Ohio Div. of Sav. and Loan Associations.
Thomas B. Ridgley, Roger A. Yurchuck, Robert W. Minor and Philip A. Brown, of Vorys, Sater, Seymour & Pease, Columbus, Ohio, filed a brief on behalf of petitioners Ohio Deposit Guarantee Fund, Horizon Sav. and Loan Co., Horizon Service Corp. and Permanent Sav. and Loan Ass'n.
James D. Blount, Jr. and John L. Jernigan, of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, Raleigh, N.C., filed a brief on behalf of petitioner Financial Institutions Assurance Corp.
Richard M. Ashton, Asst. Gen. Counsel, Bd. of Governors of the Federal Reserve System, Washington, D.C. (Richard K. Willard, Acting Asst. Atty. Gen., Civ. Div., U.S. Dept. of Justice, Washington, D.C., Michael Bradfield, Gen. Counsel, Bd. of Governors of the Federal Reserve System, Washington, D.C., with him on the brief), for respondent Bd. of Governors of the Federal Reserve System.
James F. Bell and Arthur E. Wilmarth, Jr., of Jones, Day, Reavis & Pogue, Washington, D.C., filed a brief on behalf of amicus curiae Conference of State Bank Sup'rs.
Before SETH, Chief Judge, and DOYLE and SEYMOUR, Circuit Judges.
This is a Petition for Review of changes made by the Board of Governors of the Federal Reserve System in Regulation Y (12 C.F.R. Part 225--1983) as it defines which financial institutions are "banks" and thus come under the Bank Holding Company Act (12 U.S.C. Secs. 1841-50). The acquisition of a "bank" requires prior approval by the Board of Governors and the company which acquires a "bank" becomes a "bank holding company" subject to the Act. A "bank holding company" is a company which has control over any "bank." 12 U.S.C. Sec. 1841(a)(1). What was a "bank" in the original Act depended on its charter. Since the enactment of the Holding Company Act the definition of a "bank" has been narrowed by several statutory changes.
In 1966 the charter test was abandoned and a "bank" was defined as an institution which accepted deposits which "the depositor has a legal right to withdraw on demand." The Board agreed with the change. Then in 1970 the BHCA was amended further to provide that a "bank" was an institution which accepted deposits "which the depositor has a legal right to withdraw on demand" (as before), but added "and engages in the business of making commercial loans." (12 U.S.C. Sec. 1841(c)) The definition was thus narrowed to require that both the deposit and commercial elements must be present to constitute a "bank." It is pursuant to this statutory provision or definitions that the Board argues it proceeded in its changes of Regulation Y with which we are here concerned. The Board's changes redefined the demand and the commercial loan components of the statutory provisions. The statute states what sort of demand deposits are to be used but as to loans only says "engages in the business of making commercial loans."
The new and challenged Regulation Y defines "commercial loans" in 12 C.F.R. part 225, Sec. 225.2:
"(B) 'commercial loans' means any loan other than a loan to an individual for personal, family, household, or charitable purposes, and includes the purchase of retail installment loans or commercial paper, certificates of deposit, bankers' acceptances, and similar money market instruments, the extension of broker call loans, the sale of federal funds, and the deposit of interest-bearing funds."
The challenge by petitioner goes to the inclusion of the "other than" transactions as commercial loans.
The purpose of the Bank Holding Company Act, as amended, is stated in S.Rep. No. 1084, 91st Cong., 2d Sess., reprinted in [1970] U.S. Code Cong. & Ad. News 5519, 5541.
This review concerns, with the changes in Regulation Y, both the demand deposit element of the definition in the new Regulation Y and the definition of "commercial loans" therein.
We have considered in First Bancorporation v. Board of Governors, 728 F.2d 434 (10th Cir.), the demand deposit aspect in the context of an order directed to one or two institutions and also generally. There would seem to be no need to repeat or add to what was there said and we adhere to that opinion.
The matter of the Board's new and changed view as to what constitutes a "commercial loan" under the 1970 Amendment (the Act) requires some further consideration.
I. "Commercial Loans"
The definition of "commercial loans" since 1970 was developed by regulatory agencies in determinations that particular transactions were not commercial loans under the Act. These exclusions have been explained by comparisons with the attributes of transactions generally accepted in the business as commercial loans. The rationalizations are not as important for our purposes as are the conclusions which were reached. This appeal in large part is concerned with money market and interbank transactions which heretofore were not considered to be commercial loans and which are defined as such by changes in Regulation Y.
There is no serious dispute that the term "commercial loan" was in common use and had a generally accepted meaning in 1970 both in the business and by all regulatory authorities, including the Board. There has been no change of this meaning in the business since that time, none evidenced by Congress, and no change by the regulatory agencies except the Board. The Board is thus alone in its new position and this is understandable because it was adopted with no reference to the actual meaning, but instead was adopted purely to carry out a new Board policy--to stop changes in the business of providing financial services--thus to bring a large number of additional enterprises under its jurisdiction by a change in definitions and so to accomplish this halt to change. In short, the new definition had nothing to do with the original meaning of the term nor the then current meaning, but instead was a device to accomplish an end--a change in the Board's jurisdiction. It was a device to freeze the changes in the business of financial services until the Board could persuade Congress to act. Congress had theretofore declined to adopt a moratorium proposed by the Board on changes which would also have used new definitions to accomplish the purpose. However, as a practical matter, with the new definitions there was more than a halt. It was to cause pervasive changes, thus to cause existing businesses to suddenly become bank holding companies and to necessitate reversal of acquisitions and to bring about divestitures; to change the investments permitted of state chartered savings and loans; and to have other consequences on existing business. It affected other regulatory agencies. For example, the changes required federal deposit insurance for entities which had insurance under state funds and other funds. It required entities to obtain such insurance which were not eligible for it. In short, the changes in definitions and the jurisdiction of the Board would cause extensive changes by other agencies and of course by some entities providing financial services to the public.
II. The Board since 1970 has taken a position on the relation of the Bank Holding Company Act to institutions engaging in all significant money market and interbank transactions. In each instance before 1982 the opinion or advice or ruling was that the transaction was not a commercial loan under the Act. Thus in a 1972 letter to the Federal Reserve Bank of Boston the Board, in reference to the Boston Safe Deposit Company, stated the sale of federal funds was not a commercial loan under the Act nor was the purchase of bankers' acceptances, certificates of deposit, or commercial paper. In 1976 the Board ruled that broker call loans were a passive medium of investment with no close lender-borrower relationship as existed with commercial loans under the Act. In 1980 the Board's Legal Division in a letter to the Federal Reserve Bank of Boston stated that...
To continue reading
Request your trial
-
Bartlett Memorial Medical Center, Inc. v. Thompson
... ... the district court should also have found federal question jurisdiction ... with the Provider Reimbursement Review Board ("PRRB" or "Board"). 42 U.S.C. § 1395 oo (a). An ... Corp. v. Shalala, 83 F.3d 1041, 1041 (8th Cir.1996); ... the hospital inpatient prospective payment system will be calculated to include all inpatient ... in existing law, policy, or practice); Dimension Fin. Corp. v. Bd. of Governors of Fed. Reserve ... ...
-
Wyo. State Snowmobile Ass'n v. Fish
... ... )(2) on whether the benefits of excluding federal lands in Washington State currently managed under ... and discussed real and immediate financial impacts resulting from the 2009 CHD Rule in that ... Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 519, ... Court to the comment by the Valley County Board of Commissioners. That comment generally states ... or establish a refuge, wilderness, reserve, preserve or other conservation area; and (3) ... See Dimension Financial Corp. v. Board of Governors of the Fed ... ...
-
American Civil Liberties Union v. F.C.C.
... ... FEDERAL COMMUNICATIONS COMMISSION and United States of ... America, Respondents, Board of Supervisors of Fairfax ... County, VA, Cities ... , D.C., for United Cable Television Corp., et al., were on the joint brief for Connecticut ... service in circumstances in which a cable system is not subject to effective competition." 47 ... Cf. Board of Governors v. Dimension Financial Corp., 474 U.S. 361, 106 ... presented the Court with two Federal Reserve Board regulatory definitions which conflicted ... ...
-
Doe v. Rumsfeld
... ... vaccination program for active duty, Reserve and National Guard service members. Compl. ¶ 33 ... §§ 201 et seq., and the Federal Food, Drug, and Cosmetic Act ... ("FDCA"), 21 ... from the Vaccine Adverse Event Reporting System (VAERS)," and an independent examination by the ... See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, ... future of rates, wages, corporate or financial structures or reorganization thereof, prices, ... of invalidated regulations); Dimension Fin. Corp. v. Board of Governors of the Fed ... ...