Banking and Insurance Legal Disputes: Comptroller's Interpretation of National Banking Act, Exams of Administrative Law

Download Banking and Insurance Legal Disputes: Comptroller's Interpretation of National Banking Act and more Exams Administrative Law in PDF only on Docsity! UNIVERSITY OF MARYLAND SCHOOL OF LAW Administrative Law (3 2 hours) Mr. Dash Day Division No.______ INSTRUCTIONS: Sign your name in the blank above. Put the number found above on each of your blue books. Do not put your name on or ln the blue books at any place. Return the questions when you turn in your blue books. I . (30 points) Section 24 of the National Banking Act provides that national banks "Shall have power ... to exercise all such incidental powers as shall be necessary to carry on the business of banking." Section 92 of the Act provides that "in addition to the powers now vested in such [national banks], any such [bank] located and doing business in any place which does not exceed five thousand inhabitants may act as agent for insurance companies in the sale of insurance in the community." In 1968 the Comptroller of the Currency who administers the National Banking Act issued an Ainterpretive bulletin@ which states that national banks in cities of any size could act as "insurance agents for the purpose of selling insurance which is incidental to bona fide banking transactions, provided that before a national bank shall engage in such insurance business, it shall secure the approval of the Comptroller, Approval will customarily be granted except where in the opinion of the Comptroller it would be contrary to the public interest for the applicant bank to engage in such incidental insurance In 1972 the First National Bank, located in Voldosta, a city of 100,000 population in the State of Y, applied to the Comptroller for approval to sell automobile insurance incidental to bona fide automobile loans made by the bank. The bank noted in its application that it would be in the public interest for it to be able to offer to its customers, receiving an automobile loan, the necessary insurance services as part of the transaction rather than the customer being forced to find the necessary automobile insurance elsewhere. The Comptroller approved the application. A state bank also located in Valdosta and chartered and regulated by the State of Y, petitioned the Comptroller to withdraw its approval of the application and grant it a hearing on the public interest question. The state bank noted in its petition that it had become aware of the National Bank's new powers when the National Bank advertised that it could offer automobile insurance to automobile loan customers. The Comptroller refused to grant the petition, stating that the state bank had no right to intervene in this matter, but in any case it was too late as the application had already been approved. The State Bank immediately brought an action against the comptroller in the United States District Court for the District of Y. The State Bank requested a trial de novo on the public interest issue alleging that the Comptroller had violated his own rule in that the application of the First National Bank was not in the public interest. On the same day the State of Y Insurance Association, a trade association composed of the fifty firms engaged in the insurance business in State Y, also brought an action against the Comptroller in the same court. The Trade association requested an injunction and declaratory relief claiming that the only issue was an issue of law in that Apermitting the First National Bank to sell insurance would be an unauthorized and illegal act under the National Bank Act.@ The comptroller moved for summary judgment against both parties alleging the following: (A) The state bank has no right to intervene in a matter concerning a regulatee and the regulator; but even if it did it should have challenged the application prior to approval; for it would be unfair to the applicant to reopen the matter at this time. However, in any case there is no right to a trial de novo for the determination of the public interest issue is a discretionary decision for the Comptroller and should be left to him subject to an arbitrary and capricious review by the court. (B) The Trade Association has absolutely no standing to intervene in this case as no legal rights of its own are involved. However, even if they had standing the real issue they raise is the legality of the 1968 "ruling" of the Comptroller which they should have raised when it was implemented. Further, the National Bank Act granted to the Comptroller the absolute discretion to "interpret Section 24 of the act and the Comptroller's interpretations are not subject to judicial review as long as he is within the scope of his authority How should the court rule on the Comptroller's motions for summary judgment? II (25 points) The Federal Government employs a group of specially trained civilian pilots to test certain rocket powered aircraft as part of a NASA space project. As part of the legislation authorizing this project Congress provides that, in addition to any compensation granted under the Federal Employees Liability Act, the beneficiary of any pilot killed in the performance of his duties with NASA will receive an extra payment from the government equal to three times the pilot's current annual salary. NASA is empowered to decide who and when this compensation is to be made, no hearings are required; and the statute specifically states that, "the decision of the agency is final and shall not be reviewed." Joe Hotrock, a pilot with the special project has just landed the X-l, an experimental rocket aircraft, and been debriefed for that day's tests. He drives his car off the air base, used for