National Commercial Banking Corp. of Australia, Ltd. v. Harris

In 1983, the District of Columbia Circuit upheld the authority of the federal Office of the Comptroller of the Currency under the International Banking Act (IBA) to allow foreign banks to obtain federal charters even if such banks could not obtain state charters due to state laws restricting foreign banks whose home nations did not provide reciprocal rights to banks based in the United States. Illinois responded by imposing a fee on foreign banks that operated in Illinois with federal charters if such banks’ home countries did not provide reciprocal rights to Illinois or national banks. The National Commercial Banking Corporation of Australia, Ltd. and two other Australian banks (collectively, Australian banks) (plaintiffs), which were subject to the Illinois fee, sued William Harris, the commissioner of Banks and Trust Companies of the State of Illinois (commissioner) (defendant), challenging the fee. Per the Australian banks, the fee violated, among other things, the United States Constitution’s Supremacy Clause because it conflicted with the IBA by improperly attempting to regulate a federal banking branch. The trial court ruled in favor of the Australian banks. The commissioner appealed, arguing that IBA § 5(a) permitted Illinois to impose conditions on limited federal branches of foreign banks that operated in Illinois despite the fact that IBA § 4(a) concededly barred Illinois from imposing any conditions on full federal branches or agencies in Illinois.