Comptroller of the Currency Eugene A. Ludwig emerges as a big winner from the Supreme Court's ruling in the Barnett Banks insurance case, banking lawyers said.
The justices repeatedly deferred to the comptroller's interpretation of the National Bank Act when they ruled that states must permit national banks to sell insurance from small towns, several lawyers said. The March 26 opinion bodes well for Mr. Ludwig if he decides to further expand bank insurance powers, they said.
"This is an acknowledgement of the exclusive authority of the comptroller to act with respect to insurance," said David Roderer, a partner at the Washington law firm of Winston & Strawn. "You have a virtually impenetrable shield for the comptroller from the interference of the states or courts."
"This certainly adds credibility to the forthrightness of the comptroller's position," said Melanie Fein, a partner at the Washington law firm of Arnold & Porter. "The comptroller is not running amok here. He is issuing reasonable interpretations that are being upheld by the court."
OCC chief counsel Julie Williams said the Supreme Court went beyond validating positions the agency has taken. The justices also made it responsible for deciding which state insurance rules apply to national banks.
Ms. Williams said the test, as laid out in the opinion, permits the OCC to preempt states' rules that discriminate against national banks or that impede the ability of banks to sell insurance.
For example, the OCC can reject state rules that require banks to receive approvals that insurance agents don't need, she said. But the industry must follow state laws that apply equally to banks and insurance agents, she said.
Not everyone agrees with Ms. Williams' interpretation. Ann M. Kappler, a lawyer who represents a coalition of insurance groups, said the Supreme Court went out of its way to preserve the states' regulatory role.
"I don't think the decision addresses at all how disputes will be resolved and how rules will apply to banks," said Ms. Kappler, a partner at the Washington law firm Jenner & Block.
Either Congress or the courts will have to step in and solve this dispute, she said.
The ruling reaches well beyond national banks. Laws in 37 states automatically give state-chartered banks the same power as national banks. Also, legislators historically have been receptive to pleas from state banks for parity with national institutions.
