To the Editor:

In a letter last week ["Emotion Aside, Watters Ruling Clarified," June 8], the head of public affairs of the OCC, Robert Garsson, said I misconstrued the recent Watters decision in my Viewpoint on May 18 ["Eventually, Industry Will Regret Watters Ruling"]. He's wrong.

Watters is judicial legislation. Congress did not authorize the OCC to erase state law or to rewrite the incorporation and branching laws of the 50 states. But those are the staggering effects the decision will have.

Mr. Garsson skirted this point altogether, perhaps because the OCC knows it is too shocking to admit. Ditto its ceaseless affront to our democratic principles.

Article IV of the Constitution says, "The United States shall guarantee to every state … a republican form of government." It is relevant to preemption doctrine, because it orders our nation to foster representative government in each state - that is, democracies that reflect the will of their people.

It is the only guarantee in the Constitution, and it deserves respect on the same level as the First Amendment's protection of free speech. The sections are mutually dependent, and neither one can be meaningful without the other.

As such, neither should be breached except upon a clear act of Congress that's pursuant to its enumerated powers and that aims to address an urgent, compelling national interest where there are no reasonable alternatives. On each of these tests, Watters fails totally.

There was nothing urgent in the case that threatened any national interest or that seriously would hinder Wachovia's bank to conduct its business. The OCC's visitation authority was not at risk, and there was no evidence that Michigan was going to harass Wachovia's op-sub.

The states don't harass all the other businesses in the U.S. that deal with federal and state enforcements. Why the knee-jerk assumption they'll only do it to OCC banks?

Mr. Garsson's letter wants us to believe his agency has been respectful of state concerns. He stressed repeatedly that it is working with them on cooperative efforts.

I spoke at the Conference of State Bank Supervisors' recent annual convention in Idaho (see www.csbs.org, "Meeting Presentations"), and that didn't seem the case at all. I found an audience resentful of the OCC's bullying. I urged it fight back and presented a road map to help it prevail. Watters is not written in stone.

Duncan MacDonald
Floral Park, N.Y.

Editor's Note: The author is a former general counsel of Citigroup Inc.'s Europe and North America card businesses.

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