Securities Industry Association v. Board of Governors of the Federal Reserve System
United States Supreme Court
468 U.S. 137 (1984)
In 1933, Congress enacted the Glass-Steagall Act to separate investment-banking activities from commercial banking. Bankers Trust Company was a New York-chartered member bank of the Federal Reserve System. In 1978, Bankers Trust began serving as an agent for the placement of commercial paper offered by some of its customers. The Securities Industry Association (the association) (plaintiff), a trade association, and A.G. Becker, Incorporated (Becker) (plaintiff), a commercial-paper dealer, petitioned the Board of Governors of the Federal Reserve System (the board) (defendant) to issue a ruling that Bankers Trust’s activities placing commercial paper were unlawful under the Glass-Steagall Act. The board found that commercial paper more closely resembled a commercial bank loan than an investment transaction, so commercial paper was not a security for purposes of the Glass-Steagall Act. The association and Becker sued the board in district court, challenging the board’s interpretation of security with respect to the Glass-Steagall Act. The district court disagreed with the board’s interpretation. The court of appeals found that the board’s interpretation was entitled to deference and reversed the district court’s judgment. The association and Becker appealed.
Rule of Law
Holding and Reasoning (Blackmun, J.)
Dissent (O’Connor, J.)
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