Delaware Banks?
Jonah Goldberg notes the irony in Barack Obama’s claim that banks all flock to Joe Biden’s state to escape regulation. Irony aside, I’m curious as to whether Obama even had a point, or whether he made up the whole thing out of whole cloth. Bank of America and Wachovia are both headquartered in Charlotte. Wells Fargo is headquartered in San Francisco. Citibank and JP Morgan Chase? New York. Washington Mutual? I’ll give you three guesses what state they’re headquartered in, and the first two don’t count. Capital One? Maclean. All this leaves me two questions for Obamapologists:
- Can you name a single major bank that is headquartered in Delaware, or which has expressed an interest in relocating there in the near future?
- What important banking laws in your state can this bank escape by relocating to Delaware (or, for that matter, anywhere else)?
First free clue: before answering #2, take a close look at the full legal name of the bank in question. If it ends in “NA,” the N stands for “national.” If it ends in “FSB” or “FSL,” the F stands for “federal.”
Second free clue: California, Delaware, Illinois, New York, Washington State, Washington DC are all part of the same “nation,” and all have the same “federal” government.
Third free clue: Even if your answer to #1 is a state bank, any operations that bank has in your state are subject to the banking laws of your state.
October 13th, 2008 at 2:19 pm
It’s been more than a decade since I dropped out of law school but while there I took a banking law course and a corporations course. I think Obama confused the two. There is no advantage for banks, because of the regulatory scheme to headquarter in Deleware. There is an advantage, or was, for businesses to incorporate in Delaware.
But hey, he’s the Harvard law graduate…
October 13th, 2008 at 3:49 pm
You are right that there are advantages to incorporating in Delaware, Nevada, or a few other incorporation-friendly states. All relate to boring, corporate housekeeping issues few liberals or conservatives, aside from individual shareholders, are likely to care about. AFAIK the Big Three are all Delaware corporations, but that doesn’t exempt them from Michigan taxes, Michigan labor laws, etc.