The Comptroller of the Currency's operating subsidiary rule may not be as legally rock solid as the agency claims. That is the view of lawyers who have studied the agency's decision last month allowing Zions First National Bank of Salt Lake City to underwrite municipal revenue bonds in an operating subsidiary.

These lawyers said a court challenge could last several years, but they expect the agency eventually would win.

"It is not a slam dunk," said David W. Roderer, a partner at the Washington office of the Goodwin, Procter & Hoar law firm. "There are some questions the court might find interesting to review."

"The comptroller's logic may not withstand legal scrutiny," said Gilbert T. Schwartz, a partner at the Washington law firm Schwartz & Ballen.

The debate centers on the agency's interpretation of the Glass-Steagall Act, which bars banks from owning stock in corporations or underwriting securities.

Zions' operating subsidiary would appear to violate both of those restrictions because the bank owns all the stock of a company that underwrites securities.

To approve Zions' operating subsidiary, the Comptroller's Office had to interpret the law creatively.

The Glass-Steagall Act says banks may not own firms that are "principally engaged" in securities underwriting. But it makes no mention of firms that earn only a portion of their revenue by underwriting securities.

The Comptroller's Office relies on this omission to argue that Congress intended for banks to own firms involved in underwriting. If lawmakers did not want this to occur, the agency says, they would have barred all underwriting.

Lawyers said this is a complicated argument that may be hard to prove. Judges often are unwilling to rely on a law that was intended to restrict a firm's powers in order to actually expand those powers, the lawyers said.

"That is where the defect is," Mr. Schwartz said. "You cannot use a prohibition as a basis for authorizing a subsidiary to do what a bank cannot do directly."

The Comptroller's Office has a second problem. To permit securities underwriting, the agency had to rule that operating subsidiaries are distinct from the bank. This contradicts previous agency rulings that operating subsidiaries are essentially divisions of national banks and are entitled to the same powers as national banks. For instance, the agency held that an operating subsidiary may sell insurance from a town with fewer than 5,000 residents.

Despite the lawyers' concerns, Comptroller of the Currency Eugene A. Ludwig said he expects to prevail if anyone challenges the approval.

"It has always been change, lawsuit, change, lawsuit," he said. "So it wouldn't surprise me if there was a lawsuit. But this is a very strong case."

Also working for the OCC is its string of four unanimous Supreme Court decisions deferring to the agency's interpretation of the National Bank Act. Few companies will want to finance the $1 million cost of a challenge against such a formidable foe, lawyers said.

"Anyone challenging the OCC at this point with the agency's track record has a problem," said William J. Sweet Jr., a partner in the Washington office of the Skadden, Arps, Slate, Meagher & Flom law firm. "The Comptroller starts with a big lead."

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