Indep Comm Bnkr Amer v. FRS

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 1, 1999 Decided November 2, 1999

No. 98-1482

Independent Community Bankers of America,
Petitioner

v.

Board of Governors of the Federal Reserve System,
Respondent

Citigroup, Inc.,
Intervenor

On Petition for Review of an Order of the
Board of Governors of the
Federal Reserve System

Charles D. Reed argued the cause for petitioner. With him
on the briefs were Roger J. Lerner, and Robert J. McManus.

Katherine H. Wheatley, Assistant General Counsel, Board
of Governors of the Federal Reserve System, argued the

cause for respondent. With her on the brief were James V.
Mattingly, Jr., General Counsel, and Richard M. Ashton,
Associate General Counsel.

Douglas M. Kraus argued the cause and filed the brief in
support of respondent for intervenor Citigroup, Inc.

Sarah A. Miller was on the brief for amicus curiae Ameri-
can Bankers Association Securities Association.

Before: Edwards, Chief Judge, Wald and Williams,
Circuit Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge: Travelers Group, Inc. applied to
the Board of Governors of the Federal Reserve System to
become a bank holding company. Under s 3(a)(1) of the
Bank Holding Company ("BHC") Act, 12 U.S.C. s 1842(a)(1)
(1994), Travelers needed Board approval before it could pro-
ceed with its plan to acquire all of the voting stock of an
existing bank holding company, Citicorp, Inc., and thereby
add all of Citicorp's banking and nonbanking subsidiaries to
its group of companies. After completing this transaction
Travelers planned to rename itself Citigroup, Inc. The
Board approved Travelers's application on the condition that
the new enterprise divest itself of its insurance business
within two years, so as to comply with s 4(a)(2) of the BHC
Act, 12 U.S.C. s 1843(a)(2) (1994). And it found the acquisi-
tion in compliance with s 20 of the Glass-Steagall Act, 12
U.S.C. s 377 (1994), as none of Citigroup's affiliates would
derive more than 25% of its gross revenues from bank-
ineligible securities. See Order Approving Formation of a
Bank Holding Company and Notice to Engage in Nonbank-
ing Activities, 84 Fed. Res. Bull. 985, 985 (1998), reprinted in
J.A. 1, 3-4 ("1998 Order").

The Independent Community Bankers of America
("ICBA"), representative of 5300 "community banks," i.e.,
relatively small and local ones, petitions for review of the
Board's approval order. It claims that Citigroup's obligation
to dispose of its insurance business within two years, as
specified by s 4(a)(2) of the BHC Act, is not good enough.

As to Glass-Steagall, ICBA says that the Board's construc-
tion of s 20--imposing only a proportional limit on revenues
from ineligible activities--is too loose, and should be supple-
mented either with some absolute volumetric limit so as to
prevent creation of a diversified financial services behemoth,
or with a case-specific risk analysis, or both. ICBA objected
to the acquisition in the Board's proceedings, as required for
standing to challenge the action in court. Jones v. Board of
Governors of the Fed. Reserve Sys., 79 F.3d 1168, 1170-71
(D.C. Cir. 1996). We have jurisdiction to review under 12
U.S.C. s 1848 (1994). We find the Board's interpretation and
application of the statutes reasonable, and therefore affirm.

* * *

Section 4 of the BHC Act, 12 U.S.C. s 1843, limits the
permissible financial activities for bank holding companies:

Except as otherwise provided in this chapter, no bank
holding company shall--

...

(2) after two years from the date as of which it be-
comes a bank holding company, ... retain direct or
indirect ownership or control of any voting shares of
any company which is not a bank or bank holding
company or engage in any activities other than (A)
those of banking or of managing or controlling banks
and other subsidiaries authorized under [the BHC Act]
..., and (B) those permitted under [section 4(c)(8) of
the BHC Act]....

The Board is authorized ... to extend the two year
period ... for not more than one year at a time ... but
no such extensions shall in the aggregate exceed three
years.

12 U.S.C. s 1843(a) (1994) (emphasis added).

Travelers, the acquiring entity, was engaged in various
activities, mainly insurance, not allowed for bank holding
companies under exceptions (A) and (B). Accordingly, the
emerging bank holding company could not lawfully "retain"

stock in any subsidiary conducting that business for more
than two years after the transaction by which it became a
bank holding company. The Board thus made its approval of
the Travelers-Citicorp transaction contingent on a commit-
ment that Citigroup would conform to the two-year divesti-
ture requirement. ICBA offers a series of arguments de-
signed to prove that this literal compliance with s 4(a)(2) is
inadequate.

Section 5(b) of the BHC Act and Board practice. First,
ICBA urges that s 5(b) of the BHC Act, 12 U.S.C. s 1844(b)
(1994), a general grant of power to issue regulations and
orders so as to carry out the purposes of the Act,1 requires
the Board to reject applications that would frustrate its
purpose. Here, ICBA claims, Citigroup is thwarting the
purposes of the BHC Act because it has no bona fide intent to
divest itself of its insurance activities. Instead, it is using its
temporary power to mix large-scale insurance and banking to
put pressure on Congress to amend the BHC Act to allow
that mix. ICBA also claims Citigroup will use the two years
to gain competitive advantage over other financial corpora-
tions.

ICBA is correct that Citigroup and the Board are in favor
of amending the BHC Act. The officers of Citicorp and
Travelers have openly said that they hope that Citigroup's
structure will encourage Congress to amend the BHC Act.
See Trading Places: Travelers/Citicorp Press Conf., CNNfn
(CNN television broadcast, Apr. 6, 1998), available in
LEXIS, NEWS library, ALLNEWS File (quoting Sanford
Weill, Chairman and CEO of Travelers). And the Board has
sent a unanimous letter to Congress supporting amendment
of the BHC Act to permit the combination of banking and
insurance activities. See id. (quoting John Reid, CEO of
Citicorp). (Recent news reports indicate, in fact, that Citi-
group and the Board may be about to have their way. See
Michael Schroder, "Glass-Steagall Compromise Is Reached:
Lawmakers Poised To Pass Banking-Law Overhaul After

__________
1 12 U.S.C. s 1844(b) provides in relevant part:

The Board is authorized to issue such regulations and orders as
may be necessary to enable it to administer and carry out the
purposes of this chapter and prevent evasions thereof.

Last-Minute Deals," Wall St. J., Oct. 25, 1999, at A2.) But
s 4(a)(2) makes no mention of applicants' legislative hopes or
schemes, and the Board's order, which ICBA acknowledges
tracks the statutory language, clearly requires Citigroup to
make the necessary divestitures within the specified time
period. See 1998 Order at 3, 12-13, 18, 66-67, 89-90, 107.
There is not the slightest suggestion that the Board would
have applied the statute any other way if its policy views had
been different.

Perhaps ICBA means to argue that the contingent charac-
ter of Citigroup's intent--the intent to comply with the law
unless Congress amends the BHC Act--so deeply reduces the
probability of compliance that its commitment should be
disregarded. But the statute does not assign any role to the
emerging entity's reluctance to divest; and if Citigroup ig-
nores the Board's order (and the statutory mandate), the
Board has adequate tools to force it into compliance and
punish its misbehavior. See, e.g., 12 U.S.C. s 1847 (1994).

ICBA is on similarly thin ice with its charge that Citigroup
seeks an unfair competitive advantage. As part of its condi-
tional approval, the Board secured commitments from Citi-
group designed to prevent it from leveraging its grace period
into a competitive advantage or creating corporate relation-
ships that could not be easily unwound. See 1998 Order at
86-93.

So we are rather uncertain just what "purpose" of the BHC
Act ICBA believes will be thwarted by the Board's adherence
to its language. But even if there is some such frustrated
purpose, there is no basis for ICBA's assumption that the
Board could have freely used the general terms of s 5(b) to
trump specific statutory language. ICBA points to instances
where, in ICBA's view, the Board did so. See, e.g., Citicorp
(South Dakota), 71 Fed. Res. Bull. 789 (1985); Wilshire Oil
Co. v. Board of Governors of the Fed. Reserve Sys., 668 F.2d
732, 733 (3d Cir. 1981). But the Board in those cases found
that the proposed transaction had no purpose other than to
evade the BHC Act's provisions. See Citicorp, 71 Fed.Res.
Bull. at 789 (ordering that Citicorp could not acquire a state-
chartered South Dakota bank to take advantage of a state law
allowing out-of-state bank holding companies to engage in
large-scale insurance activities so long as they did not com-

pete with South Dakota insurance or banking interests);
Wilshire Oil, 668 F.2d at 733 (upholding the Board's ruling
that a bank holding company could not opt out of the BHC
Act by making a small change to its withdrawal policy that it
had no intent to enforce).2 Here the Board specifically found
that the merger was not an attempt to evade the prohibitions
of the BHC Act. 1998 Order at 11.

More importantly, since those decisions the Supreme Court
has ruled that the Board cannot use s 5(b) to bend its
statutorily granted authority. Board of Governors of the Fed.
Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 373 n.6
(1986). The Eleventh Circuit has applied the Dimension
decision to overturn a Board ruling factually similar to the
one in Wilshire. See Florida Dep't of Banking & Finance v.
Board of Governors of the Fed. Reserve Sys., 800 F.2d 1534
(11th Cir. 1986). Here, too, the Board cannot exercise non-
existent authority to alter the statutory text.

ICBA is also incorrect that the Board is bound by its cases
decided under s 4(c)(9) of the BHC Act, 18 U.S.C.
s 1843(c)(9), which allows the Board to exempt foreign bank
holding companies from the Act upon determining that an
exemption would not be substantially at variance with the
Act's purposes.3 In Fortis, 1994 Fed. Res. Interp. Ltr.
LEXIS 313, and a related line of letter rulings, the Board
__________
2 ICBA also argues that the Board has regularly departed from
the statutory text by granting grace periods to existing bank
holding companies whose acquisitions cause them to violate
s 4(a)(1) of the BHC Act, 12 U.S.C. s 1843(a)(1). This case pres-
ents no opportunity to review the Board's practice of granting grace
periods under s 4(a)(1).

3 Section 4(c)(9) of the BHC Act, 18 U.S.C. s 1843(c)(9) provides
in relevant part:

(c) The prohibitions in this section shall not apply to

...

(9) ... [a] company organized under the laws of a foreign
country ... if the Board ... determines that ... the exemp-
tion would not be substantially at variance with the purposes
of this chapter and would be in the public interest.

granted exemptions, but imposed substantial restrictions on
Fortis's and the other companies' insurance activities. ICBA
asks why not here? But the Board distinguished those cases
as being based on the foreign bank holding companies' unique
ability to expand their insurance businesses during any period
of exemption, and on the Board's broad discretionary power
under s 4(c)(9) to grant or withhold exemption altogether.
See 1998 Order at 87 n.102.

Board regulations. ICBA argues that the Board's regula-
tions require Citigroup to come into compliance with s 4(a)(2)
as quickly as possible and to submit a detailed divestiture
plan before, or soon after, the merger's approval. See 12
C.F.R. s 225.138(b)(1) (1999) ("[T]he affected company should
endeavor and should be encouraged to complete the divesti-
ture as early as possible during the specific period."); id.
s 225.138(b)(2) (1999) ("[A bank holding company] should
generally be asked to submit a divestiture plan promptly.").
But these regulations are explicitly labelled "statement[s] of
policy," and accordingly bind neither the agency nor the
public. Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 94 (D.C.
Cir. 1997). We note, in any event, that the Board here
explained that a detailed plan was unnecessary because of the
voluminous material in the record concerning Travelers's
ability to comply with the divestiture requirement. See 1998
Order at 12.

* * *

ICBA's second claim rests on s 20 of the Glass-Steagall
Act (the "Act"), 12 U.S.C. s 377.4 The Act limits the
securities-related activities of commercial banks and their
affiliates. Section 16 of the Act, 12 U.S.C. s 24 (Seventh),
prohibits banks from underwriting or dealing in any securi-
ties, but specifically permits them to underwrite United
States government obligations and state or municipal general
obligations. The allowed activities are commonly referred to
as "bank-eligible securities," while all others are called, not
surprisingly, "bank-ineligible securities." See Securities In-

__________
4 The Glass-Steagall Act is the common name for several scat-
tered provisions of the Banking Act of 1933.

dustries Ass'n v. Board of Governors of the Fed. Reserve
Sys., 900 F.2d 360, 361 (D.C. Cir. 1990). In contrast to s 16's
general prohibition, s 20 permits companies affiliated with
banks to underwrite or deal in securities so long as the
affiliate is not "engaged principally" in those activities:

[N]o member bank [of the Federal Reserve System] shall
be affiliated ... with any corporation, association, busi-
ness trust, or other similar organization engaged princi-
pally in the issue, flotation, underwriting, public sale, or
distribution ... of stocks, bonds, debentures, notes, or
other securities....

12 U.S.C. s 377 (1994) (emphasis added). The Board and the
courts have read this limit as applying only to bank-ineligible
securities, see Securities Industry Ass'n v. Board of Gover-
nors of the Fed. Reserve Sys., 839 F.2d 47, 58-62 (2d Cir.
1988) ("SIA I"), and ICBA does not contest that reading.

In 1996 the Board adopted its current test, stating that if
an affiliate derives more than 25% of its revenues from bank-
ineligible securities, it is "engaged principally" in such activi-
ties. See Revenue Limit on Bank-Ineligible Activities of
Subsidiaries of Bank Holding Companies Engaged in Un-
derwriting and Dealing in Securities, 61 Fed. Reg. 68,750,
68,754 (1996) ("1996 Order"). Instead, says ICBA, at least
for a merger of this size the Board should examine the risks
associated with the particular kind of bank-ineligible securi-
ties at issue and the absolute size of the merging entities'
ineligible securities activities. Under those standards, ICBA
urges, Citigroup--which contains several large securities
companies including Salomon Smith Barney--is "engaged
principally" in bank-ineligible securities activities.5

We must first consider our jurisdiction. The rule applied
to the Travelers-Citicorp transaction is the rule adopted in

__________
5 ICBA, in advocating an absolute volumetric test argued that one
of the proper units of analysis was Citigroup as a whole, whereas
the Board continued its policy of examining the businesses only
subsidiary by subsidiary. In light of our disposition of the case we
need take no position on this issue.

the Board's 1996 Order, which was reviewable in the court of
appeals by a petition filed "within thirty days after the entry
of the Board's order." See 12 U.S.C. s 1848. ICBA sought
no review. Responding to the suggestion that this inaction
might preclude part of its appeal, ICBA speaks as if it
challenged only the application of the 25% rule to this case
rather than the rule itself. But in fact there is not a great
deal left to ICBA's appeal if we must assume the lawfulness
of the rule's standard--a 25% ceiling on the ineligible busi-
nesses' contribution to revenue, functioning as the exclusive
limit under s 20. So we must decide whether the time limit
in s 1848 bars our review of ICBA's substantive claim against
the rule itself.

We have frequently said that a party against whom a rule
is applied may, at the time of application, pursue substantive
objections to the rule, including claims that an agency lacked
the statutory authority to adopt the rule, even where the
petitioner had notice and opportunity to bring a direct chal-
lenge within statutory time limits. See Graceba Total Com-
munications, Inc. v. FCC, 115 F.3d 1038, 1040-41 (D.C. Cir.
1997); Public Citizen v. NRC, 901 F.2d 147, 152 & n.1 (D.C.
Cir. 1990); NLRB Union v. Federal Labor Relations Auth.,
834 F.2d 191, 195 (D.C. Cir. 1987); Montana v. Clark, 749
F.2d 740, 744 n.8 (D.C. Cir. 1984) ("[W]here ... the petitioner
challenges the substantive validity of a rule, failure to exer-
cise a prior opportunity to challenge the regulation ordinarily
will not preclude review."); Functional Music, Inc. v. FCC,
274 F.2d 543, 546 (D.C. Cir. 1958) ("[U]nlike ordinary adjudi-
catory orders, administrative rules and regulations are capa-
ble of continuing application; limiting the right of review of
the underlying rule would effectively deny many parties
ultimately affected by a rule an opportunity to question its
validity."). Although the discussions of the application excep-
tion in several of these cases were dicta, Graceba clearly
applied the exception. 115 F.3d at 1040-41 (excusing failure
to challenge May 1994 rulemaking). By contrast, we have
said that procedural attacks on a rule's adoption are barred
even when it is applied. See Jem Broadcasting Co. v. FCC,
22 F.3d 320, 325 (D.C. Cir. 1994) ("[C]hallenges to the proce-

dural lineage of agency regulations, whether raised by direct
appeal, by petition for amendment or rescission of the regula-
tion or as a defense to an agency enforcement proceeding,
will not be entertained outside the 60-day period provided by
statute."); NRDC v. NRC, 666 F.2d 595, 602-03 (D.C. Cir.
1981) (dismissing petition alleging procedural defects as un-
timely); see also Public Citizen, 901 F.2d at 152 ("[A] statuto-
ry review period permanently limits the time within which a
petitioner may claim that an agency action was procedurally
defective.").

In one case, Raton Gas Transmission Co. v. FERC, 852
F.2d 612 (D.C. Cir. 1988), we suggested that even at a time of
application petitioners may obtain review of an agency regula-
tion outside of a statutorily prescribed period only for "gross
violations of statutory or constitutional mandates, or denial of
an adequate opportunity to test the regulation in court." Id.
at 615. We offered no explanation for suddenly limiting
permissible statutory challenges to ones of "gross" violation,
and we proceeded to reach the merits of the petitioner's
claim, see id. at 617. Our later cases have returned to the
long standing position allowing substantive challenges to the
application of a regulation. See, e.g., Graceba, 115 F.3d at
1040; Public Citizen, 901 F.2d at 152 & n.1. As a result, we
think it inappropriate to follow the language of Raton. See
Haynes v. Williams, 88 F.3d 898, 900 n.4 (10th Cir. 1996)
("[W]hen faced with an intra-circuit conflict, a panel should
follow earlier, settled precedent over a subsequent deviation
therefrom."); Texaco Inc. v. Louisiana Land & Exploration
Co., 995 F.2d 43, 44 (5th Cir. 1993) ("In the event of conflict-
ing panel opinions ... the earlier one controls, as one panel of
this court may not overrule another.")

Finally, one of our cases held that (absent special excep-
tions, as for a challenger that lacked a meaningful opportuni-
ty to challenge the rule during the review period) even a
party subjected to a rule could not bring a substantive
challenge to the rule at the time of enforcement. Eagle-
Picher v. EPA, 759 F.2d 905, 914 (D.C. Cir. 1985) (the "mere
fact that the rule is applied to the petitioner after the
statutory period expires" is not enough to permit review); see

also id. at 911-12 (discussing the limited exceptions). But in
Eagle-Picher the statute authorizing judicial review explicitly
prohibited all review after the prescribed period. See 42
U.S.C. s 9613(a) (1982) ("Any matter with respect to which
review could have been obtained under this subsection shall
not be subject to judicial review in any civil or criminal
proceeding for enforcement."), quoted in Eagle-Picher, 759
F.2d at 911. The Administrative Conference of the United
States in 1982 urged Congress not to prohibit challenges to
the statutory authority for a rule unless there were a compel-
ling need for prompt compliance on a national or industry
wide basis, see Recommendations of the Administrative Con-
ference, 47 Fed. Reg. 58207, 58210 (1982), and the dearth of
statutes that prohibit review after the statutory period has
run suggests that Congress has generally agreed. See gen-
erally Frederick Davis, "Judicial Review of Rulemaking: New
Patterns and New Problems," 1981 Duke L.J. 279, 281, 282-
90 (reviewing statutes and cases). The statute at issue here,
12 U.S.C. s 1848 (1994), contains no such explicit bar. Ac-
cordingly, we may now turn to the merits and consider
ICBA's attack on the Board's exclusive 25% revenue limit.

Section 20 of the Glass-Steagall Act prohibits a member
bank from being affiliated with any corporation "engaged
principally" in various bank-ineligible securities transactions.
We agree with the Second Circuit that the term "engaged
principally" is "intrinsically ambiguous." SIA I, 839 F.2d at
63. Thus we defer to any reasonable Board interpretation.
See Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43
(1984).

ICBA argues that s 20 is designed to minimize risk, and
therefore the Board cannot confine itself to the revenue share
contributed by bank-ineligible activities but must examine
such risk variables as the nature of the bank-ineligible assets
at issue and the absolute size of the merger participants. We
first address the Board's selection of 25% for the limit, and
then these two special objections.

Before 1987 the Board had no occasion to test the meaning
of s 20. In 1987, in response to specific requests to allow
non-bank affiliates to engage in underwriting and dealing of

bank-ineligible securities, the Board decided that an affiliate
is "engaged principally" in bank-ineligible activities if: (1) the
gross revenue from such activities exceeds 5-to-10 percent of
the affiliate's total gross revenues; and (2) the affiliate's
activities in each type of ineligible security accounts for more
than 5-to-10 percent of the total domestic market for that
activity in the prior year. See J.P. Morgan & Co., 73 Fed.
Res. Bull. 473 (1987). As a prudential matter, the Board
initially limited the share of ineligible revenue to 5% so that it
could gain experience in supervising such affiliates. The
Second Circuit struck down the market share portion of the
test, leaving in place only the gross revenues test. SIA I, 839
F.2d at 67 (2d Cir. 1988). It reasoned that Congress had
been fully aware of the growing proportional role of commer-
cial banks in securities origination, and yet had explicitly
chosen a formula directly reflecting its anxiety "over the
perceived risk to bank solvency resulting from their over-
involvement in securities activity." Id. at 68. In Securities
Industries Ass'n v. Board of Governors of the Fed. Reserve
Sys., 900 F.2d 360, 364 (D.C. Cir. 1990), we noted that the
Second Circuit's decision had necessarily upheld a pure reve-
nue share test as an adequate definition of "engaged princi-
pally."

In 1989, the Board raised the ceiling on affiliates' ineligible
activities to 10% of total revenue. See 1996 Order at 68751 &
n.10. Finally, in 1996 it raised the ceiling to the current 25%.
1996 Order at 68754. It noted at the time that some com-
mentators worried that its new rule would allow banks to
"affiliate with the nation's largest investment banks, contrary
to the express purpose of section 20 of the Glass-Steagall
Act." Id. But it set the concern aside with a look at history,
identifying the controlling question as whether its test would
have allowed the sort of securities affiliations prevalent in the
1920s and 1930s--the apparent sources of congressional con-
cern. Id. At that time, firms "deriving more than 25% of
their income from underwriting and dealing in securities were
common." Id.

In its 1996 Order the Board also considered--and reject-
ed--the idea that increasing the gross revenues limit from
10% to 25% would cause "an increased risk to the safety and

soundness or reputation of the nation's banks or to the
federal safety net." 1996 Order at 68755. It based that
conclusion on bank holding companies' demonstrated ability
to manage the risks of investment banking over the previous
nine years, the substantial safeguards in place to insulate
banks from the failure of their affiliates, and the independent
regulatory requirements administered by the Securities Ex-
change Commission that protect against insolvency of s 20
affiliates. Id.

Where a statute can reasonably be understood to invite an
agency to draw a quantitative proportional line, it is rare that
a court can reject the agency's selection of one percentage
over another. We see no basis for doing so here. According-
ly, we turn to ICBA's main attack, which is directed to
whether the statute allows the Board to choose a purely
quantitative proportional line and thereby to disregard other
indicia of risk and/or the absolute level of sales volume.

Risk. In its 1996 Order, the Board determined that s 20
does not allow for an independent examination of the risk
associated with the particular type of securities activities at
issue. Instead, the Board may only decide whether an affili-
ate is "engaged principally" in bank-ineligible activities. 1996
Order, 61 Fed. Reg. at 68754 ("Congress itself has decided
when a company's risks of underwriting and dealing are too
great to allow affiliation with a bank: whenever they consti-
tute a principal activity of that company."). The Board
decided that more individualized analyses would be unwork-
able, and a case-by-case analysis would produce substantial
uncertainty among affiliates and examiners. Id. at 68754.
(Recall that the limit endures, rather than being a one-shot
issue at a moment of acquisition.) Moreover, the Board
found that the level of risk from an affiliation is already
examined as part of the required analysis under the BHC
Act. See 12 U.S.C. s 1842(c); 1998 Order at 14-21, 74 n.19;
1996 Order at 68755. Although this analysis is limited to the
moment a company applies to become a bank holding compa-
ny, the Board has continuing authority to examine the invest-
ment activities of affiliates whose investments put the bank
holding company's subsidiary bank at risk. See 12 U.S.C.

s 1844(e)(1). The Board's decision appears entirely reason-
able in light of Congress's chosen language.

Absolute sales volume. As we observed before, the Second
Circuit in SIA I found that the Board lacked the power to use
a market share test. 839 F.2d at 67-68. It nonetheless left
open the possibility of a volumetric limit of sales, id. at 68, an
option the Board had rejected on the ground that it was too
easily subject to manipulation, id. at 67. Thus, ICBA is
correct to observe that no court has rejected the lawfulness of
such a volumetric limit. Nor do we do so here. But at the
same time we believe that the phrase "engaged principally"
strongly suggests, as the Second Circuit observed, an over-
riding concern with risks due to a bank affiliate's "overin-
volvement" in securities activity. Accordingly, we believe a
test addressed solely to the ineligible securities business's
proportional contribution to revenue is at least permissible
under s 20.

* * *

ICBA concludes with a novel claim that the Board's action
violates the constitutionally required separation of powers.
Had the Board acted in violation of Congress's will, of course
there would be a logical claim that such an assertion of power
by a part of the executive branch violated "separation of
powers," but no such claim would be necessary. Because it is
undisputed that the Board can exercise only powers granted
by Congress, and (unlike the President) has none supplied
directly by the Constitution, it appears that the activities of
the Board (and other such agencies) will likely never call for
the sort of analysis provided by the tripartite framework of
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 637-
38 (1952) (Jackson, J., concurring), designed to take account
of powers held directly by the President.

* * *

The Board's order is

Affirmed.