Summary of Lewis v BT Investment Managers S. Ct. 1980
Relevant Facts: A Florida statute prohibits out-of-state banks, bank holding companies, and trust companies from owning or controlling a business within the State that sells investment advisory services. Another statute prohibits all corporations except state-chartered banks and trust companies and national banks located in Florida from performing certain trust and fiduciary functions. Appellee an out-of-state bank holding company’s proposal to operate appellee investment management subsidiary in Florida was rejected by the Board of Governors of the Federal Reserve System on the ground that it was prohibited by statute.
Legal Issue(s): Whether the statutes, viewed independently of federal legislation regulating the banking industry, burden interstate commerce, by discriminating against bank holding companies that operate principally outside Florida, in a manner contrary to the Commerce Clause. The second is whether Congress, by its own legislation in this area, has created an area in which the States may regulate free from Commerce Clause restraints ?
Court’s Holding: D Ct (1) Florida statute which prohibits out-of-state banks, holding companies and trust companies from owning or controlling any business within Florida that sells investment advisory services directly burdens interstate commerce in manner that contravenes commerce clause’s implicit limitation on state power; (2) effects of Florida statute on interstate commerce had not been permitted by Congress through Bank Holding Company Act.
Procedure: S. Ct. affirm the judgment of the District Court insofar as it declares unconstitutional the challenged portions of the statute and enjoins their enforcement.
Law or Rule(s): Congress shall have the sole power to regulate Commerce. . . .
Court Rationale: Historically, banking and related financial activities are of profound local concern and have interstate attributes. The statute is “parochial," in the sense it prevents foreign enterprises from competing in a local market. The out-of-state location of a bank holding company’s principal operations is an explicit barrier to the presence of an investment subsidiary within the State of Fl. Like Exxon this statute discriminates against a particular kind of conglomerate organization, but it’s application is not evenhanded. Trust companies outside of FL are prohibited from operating within the State of FL, while local trust and financial enterprises are not impaired equally.
Plaintiff’s Argument: The Statute favors local industry and protects local industry at the expense of discriminating against identical outside organizations.
Defendant’s Argument: Appellant- The Act grants authority to the States to prohibit out-of-state bank holding companies from owning local subsidiaries that provide bank-related services.