CASE ANALYSIS

Case Analysis



Case Analysis

Question 1

Contrary to the suggestions of some opponents of access fees, financial institutions are private, for-profit enterprises, and not public utilities. A national bank's authority to provide a product or service necessarily carries with it the authority to charge a fee for the product or service provided. National banks are charged with the authority to engage in the “business of banking,” which cannot be separated from the authority to seek a business return. Any contrary rule would render national bank powers illusory.

The Supreme Court has long recognized that national banks are private enterprises that are entitled to conduct normal business activities. In holding that the National Bank Act pre-empts a state restriction on national bank advertising, the Court stated: “Modern competition for business finds advertising one of the most usual and useful of weapons. It would require some affirmative indication to justify an interpretation that would permit a national bank to engage in a business but gave no right to let the public know about it”. As a matter of statutory interpretation, it would make even less sense to permit national banks to “engage in a business,” but then to deny them the ability to charge for providing the service.

Because federal statutes impose neither a prohibition on charging fees nor a cap on how much a national bank may charge, national banks are free to set the prices for their services, subject only to the OCC's supervisory oversight. The National Bank Act does not displace business judgments by dictating any general restrictions on the kinds or amounts of fees that banks may charge for services, leaving those decisions to the discretion of bank management. National bank fee rate decisions are therefore not subject to limitation under either state law or federal law.

Question 2

A national bank ...