Law 240 Banking Law

Organization of Banks, Bank Powers and Branch Banking

Answer

According to U.S. Code § 36 (j) a branch of a bank is defined as any branch agency, branch office, branch bank, branch place of business or any additional office located in a territory or state of the United States of America at which money is lent,  checks are paid and deposits a machine. However remote service units and automated teller machines are excluded from the meaning. This paper discusses why an ATM should be regarded as a branch of the national bank. An ATM is a machine which performs banking functions such as dispensing cash, receiving deposits and providing information about accounts.

In the case of Independent Bankers Association v. Marine Midland Bank, the district court had to analyze whether or not a shared ATM can be considered as a Brach of the national Bank. An argument had been provided by the defendant that the ATM of Wegman was not a branch and if the contrary is held it would be against the competitive equality the McFadden Act seeks to provide. The ATM which was is question was installed so that it could help the person presenting the member card of a bank  to gain a cash advances on credit cards, enquires, cash withdrawals and deposits. The responsibility of taking out cash from the deposit section was provided to Marine. The cash was only dispensed from the ATM by the Wegman when it received an electron confirmation from Marine and thus no cash was to be dispensed to the customers in excess of what was held by them in their marine account.

In the case of Independent Bankers Association of America v. Smith, it was ruled by the court that any structure which carries out the fundamental functions banking such as receiving deposits, dispensing cash has to be held as a branch of the national bank with respect to Section(f) if the establishment of the structure is done by the national bank and offers the customers convenience which would make it achieve competitive advantage on other banks. In was also provided by the court that the powers of the court is limited to interpret a provisions as it has been provided by a legislation and not how the court would have wanted it to be written. It was further provided that in case there are contradictory terms between the state and the federal law it can also be addressed through a legislative process.

Thus it can be analyzed through the above discussion that a structure which performs the basic functions of a bank is regarded as its branch. A structure which provides the bank a competitive advantage over the other is also regarded as a branch. The functions of ATM is not only perform the basic functions of banking such as Dispensing cash, providing loan on credit cards and receiving deposits but also to provide the bank a competitive advantage over the other banks using it. Thus an ATM shared by banks can be regarded as a breach of the National bank.

References

Cha, Jae Min, et al. "Automated teller machine." U.S. Patent No. D724,812. 17 Mar. 2015.

Independent Bankers Association of America v. Smith534 F.2d 921 Independent Bankers Association v. Marine Midland Bank 583 F. Supp. 1042 (W.D.N.Y. 1984) U.S. Code § 36 (j)