Watters v. Wachovia Bank

In Watters v. Wachovia Bank, N.A., 127 S. Ct. 1559 (2007), the U.S. Supreme Court held that the State of Michigan could not restrict the subsidiary of a bank that had power under 12 U.S.C.S. § 24a(g)(3)(A) to engage in real estate lending through the operating subsidiary. In other words, the federal banking law trumped the state regulation of real estate lending.

Justice Ruth Bader Ginsburg wrote the decision for a 5-3 court, with Justices Antonin Scalia and Chief Justice John Roberts dissenting and thereby supporting states' rights. Justice Clarence Thomas recused himself.

The case is interesting for producing a split on federalism between the two newest Justices, Chief Justice Roberts and Justice Sam Alito.