Clarke v. Securities Industry Association

Facts

In 1982, two national banks, Union Planters National Bank of Memphis and Security Pacific National Bank of Los Angeles, applied to the Comptroller of the Currency for permission to open offices offering discount brokerage services to the public. Both banks proposed to offer these services not only at their branch offices but also at other locations inside and outside their home states. The Comptroller concluded that these non-chartered offices would not constitute “branches” under the McFadden Act because they would not perform any of the statutory branching functions (receiving deposits, paying checks, or lending money). The Comptroller determined that while Discount Brokerage would serve as an intermediary for margin lending, loan approval would take place at chartered bank offices, and although it would maintain customer balances, these accounts differed sufficiently from ordinary bank accounts that they would not be considered deposits. The Securities Industry Association, representing securities brokers who competed with banks in providing brokerage services, challenged the Comptroller’s decision, arguing that bank discount brokerage offices are branches subject to geographic restrictions. The Comptroller disputed this on the merits and also argued that the Association lacked standing because it was not within the zone of interests protected by the McFadden Act.