Securities Industry Association v. The Board of Governors of the Federal Reserve System Bankers Trust Company, Securities Industry Association v. The Board of Governors of the Federal Reserve System Bankers Trust Company, Securities Industry Association v. The Board of Governors of the Federal Reserve System Bankers Trust Company, Securities Industry Association v. The Board of Governors of the Federal Reserve System, Bankers Trust Company

This is an appeal from an order of the district court invalidating under the Glass-Steagall Act a decision of appellant Board of Governors of the Federal Reserve System that permitted appellant Bankers Trust Company, a state-chartered commercial bank and a member of the Federal Reserve System, to place commercial paper issued by third parties. The Act prohibits commercial banks from engaging in investment banking. The Board of Governors determined that Bankers Trust's activities did not cross the line into investment banking, but the district court concluded that they did. After considering the language and history of the Act and the applicable case law, we reverse the judgment of the district court and reinstate the Board's decision.

"Commercial paper" comprises unsecured, large denomination promissory notes written with maturities of less than nine months to supply the current capital needs of corporate issuers. In privately negotiated transactions, issuers typically place commercial paper with large, financially sophisticated institutional investors (such as insurance companies or pension funds).

Bankers Trust acts as an advisor and agent to commercial paper issuers by advising each issuer of the interest rates and maturities that institutional investors are likely to accept, by soliciting prospective purchasers for commercial paper the client decides to issue, and by placing the issue with the purchasers. Bankers Trust does not make any general advertisement or solicitation regarding any issue it is seeking to place, and does not place any issues with individuals or the general public.

Bankers Trust receives a commission for its services based upon a percentage of the issuer's total outstanding commercial paper during a one-year period. To ensure that it acts solely as an agent without an independent financial stake in the success of issues it places, which would clearly involve it in investment banking, Bankers Trust does not purchase or repurchase for its own account, inventory overnight, or take any ownership interest in any commercial paper it places. Nor does Bankers Trust any longer make loans on or collateralize loans with the paper it places (a practice it formerly followed when necessary to remedy any deficiency in placement of an issue).

This appeal is the latest installment in a dispute that began in 1979 when the Securities Industry Association ("SIA"), a trade association of underwriters, brokers, and securities dealers, petitioned the Board of Governors for a ruling that it was unlawful for Bankers Trust and other commercial banks to sell commercial paper issued by unrelated entities. The Board ruled against the SIA, but ultimately the Supreme Court, disagreeing with the Board of Governors, held that commercial paper is included within the category of "notes or other securities" addressed by the Banking Act of 1933, commonly known as the Glass-Steagall Act, and remanded the case for a determination of an unresolved issue: whether Bankers Trust's placement of commercial paper constituted the "underwriting" or "business of issuing, underwriting, selling or distributing" that the Act prohibits. Securities Indus. Ass'n v. Board of Governors of the Fed. Reserve Sys., 468 U.S. 137, 160 n. 12, 104 S.Ct. 2979, 2992 n. 12, 82 L.Ed.2d 107 (1984) (SIA ).

Upon remand, the Board of Governors found that Bankers Trust's placement of commercial paper constituted the "selling" of a security without recourse and solely upon the order and for the account of customers, a practice permitted by section 16 of the Act, 12 U.S.C. Sec. 24 (Seventh) (1982). Federal Reserve System, Statement Concerning Applicability of the Glass-Steagall Act to the Commercial Paper Activities of Bankers Trust Company (June 4, 1985) ("Board Statement"), Joint Appendix ("J.A.") at 195. The district court reviewed the Board's decision on the petition of the SIA and granted SIA summary judgment, holding that Bankers Trust's activities involved the "underwriting" and "distributing" prohibited by section 21(a)(1) of the Act, 12 U.S.C. Sec. 378(a)(1) (1982). Securities Indus. Ass'n v. Board of Governors of the Fed. Reserve Sys., 627 F.Supp. 695 (D.D.C.1986). This appeal followed.II.

In reviewing the Board's decision, we owe the agency's determination "the greatest deference." Board of Governors of the Fed. Reserve Sys. v. Investment Co. Inst., 450 U.S. 46, 56, 101 S.Ct. 973, 981, 67 L.Ed.2d 36 (1981) (ICI ); accord Securities Indus. Ass'n v. Board of Governors of the Fed. Reserve Sys., 468 U.S. 207, 217, 104 S.Ct. 3003, 3009, 82 L.Ed.2d 158 (1984) (Schwab ) (giving Board "substantial deference"); see also Board of Governors of the Fed. Reserve Sys. v. Agnew, 329 U.S. 441, 450, 67 S.Ct. 411, 415, 91 L.Ed. 408 (1947) (Rutledge, J., concurring) ("[The Board's] specialized experience gives [it] an advantage judges cannot possibly have, not only in dealing with the problems raised for [its] discretion by the system's working, but also in ascertaining the meaning Congress had in mind in prescribing the standards by which [the Board] should administer it."). This principle is not contradicted by SIA, 468 U.S. at 143-44 (according only "little deference"), or Investment Co. Inst. v. Camp, 401 U.S. 617, 626-28, 91 S.Ct. 1091, 1097, 28 L.Ed.2d 367 (1971) (Camp ) (rejecting a deferential approach).

In the latter cases, the agency involved failed to present the Court with anything to which to defer. In Camp, Justice Stewart, writing for the majority, noted that "courts should give great weight to any reasonable construction of a regulatory statute adopted by the agency charged with the enforcement of that statute," 401 U.S. at 626-27, 91 S.Ct. at 1097, but said the "difficulty" was that the Comptroller of the Currency had promulgated the challenged regulation "without opinion or accompanying statement," id. at 627, 91 S.Ct. at 1097. Without the benefit of any "expressly articulated position at the administrative level," the Court refused to defer to the agency's position, reasoning that "[i]t is the administrative official and not appellate counsel who possesses the expertise that can enlighten and rationalize the search for the meaning and intent of Congress." Id. at 628, 91 S.Ct. at 1097-98.

In SIA, the Board had provided an opinion explaining its view of whether commercial paper constituted "securities" for purposes of the Glass-Steagall Act but failed to analyze the legislative purposes behind the Act. Because of this omission, the Court gave "little deference" to the Board's position that its interpretation ran afoul of none of the purposes of the Act. 468 U.S. at 143-44, 104 S.Ct. at 2983-84. The Court at the same time observed generally that because "[t]he Board is the agency responsible for federal regulation of the national banking system, ... its interpretation of a federal banking statute is entitled to substantial deference." Id. at 142, 104 S.Ct. at 2983.

In the present case, as in ICI and Schwab, the Board has comprehensively addressed the language, history, and purposes of the Act that bear on whether commercial banks should be able to place commercial paper. We consequently owe the Board's determination "substantial deference" or "significant weight," and we must look to Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), to guide our application of such principles of review. See Investment Co. Inst. v. Conover, 790 F.2d 925, 932 (D.C.Cir.1986). Since Congress has not clearly addressed the question of whether activities such as those conducted by Bankers Trust fall within the prohibitions of the Act, we must examine whether the agency, in filling the statutory gap left by Congress, has acted reasonably. Chevron, 467 U.S. at 843-45, 104 S.Ct. at 2781-83.

The question in this case involves the interplay of sections 16 and 21 of the Glass-Steagall Act. These provisions implement what the Supreme Court has described as the Act's "general purpose of separating as completely as possible commercial from investment banking," ICI, 450 U.S. at 70, 101 S.Ct. at 989. Section 16, 12 U.S.C. Sec. 24 (Seventh) (1982), draws the line between permissible and impermissible activities for commercial banks, while section 21(a)(1), 12 U.S.C. Sec. 378(a)(1) (1982), draws this line for investment banks. The Supreme Court has found that "Sec. 16 and Sec. 21 seek to draw the same line." SIA, 468 U.S. at 149. The issue before us is whether the Board has reasonably determined that the activities of Bankers Trust do not cross that line between commercial and investment banking.

Section 16 of the Act provides in relevant part that the "business of dealing in securities and stock by [a commercial bank] shall be limited to purchasing and selling such securities and stock without recourse, solely upon the order, and for the account of, customers, and in no case for its own account, and the [bank] shall not underwrite any issue of securities or stock." 12 U.S.C. Sec. 24 (Seventh) (1982). Section 21(a)(1) makes it "unlawful" for

any person, firm, corporation, association, business trust, or other similar organization, engaged in the business of issuing, underwriting, selling, or distributing, at wholesale or retail, or through syndicate participation, stocks, bonds, debentures, notes, or other securities, to engage at the same time to any extent whatever in the business of receiving deposits subject to check or to repayment upon presentation of a passbook, certificate of deposit, or other evidence of debt, or upon request of the depositor.

12 U.S.C. Sec. 378(a)(1) (1982). Because no one disputes that Bankers Trust constitutes a commercial bank within the meaning of these sections, we must determine, first, if the Board has reasonably concluded that the commercial paper placement activities of Bankers Trust fall within the permissive language of section 16. To determine this, we must look at the question of what the statute means by "underwrite," for underwriting not only triggers section 21's prohibitions but also defeats section 16's permissive effect. We must, in contrast, address the meaning of section 21's terms "issuing, ... selling, or distributing" only if section 16 is inapplicable. In other words, section 21 cannot be read to prohibit what section 16 permits. See ICI, 450 U.S. at 63, 101 S.Ct. at 985 (section 21 not intended to bar banking practices permitted by section 16); see also United States v. Menasche, 348 U.S. 528, 538-39, 75 S.Ct. 513, 519-20, 99 L.Ed. 615 (1955) (rejecting an interpretation of a statutory provision that would nullify the effect of another provision). Therefore, if we find that the Board acted reasonably in concluding that section 16 permits Bankers Trust's activities, that is the end of our analysis.

While this proposition seems obvious, SIA nonetheless argues that we must examine both the prohibitions of section 21 and the permissive phrase of section 16 to determine if the Board has erred. SIA seeks to restrict the scope of section 16 by relying on language (added to section 21 in 1935) that expressly refers to section 16 as an exception to section 21's restrictions, stating that "the provisions of this paragraph shall not prohibit national banks or State banks ... from dealing in, underwriting, purchasing, and selling investment securities, or issuing securities, to the extent permitted to national banking associations by the provisions of [section 16 of the Act]." 12 U.S.C. Sec. 378(a)(1) (1982). SIA directs our attention to a passage in the House Report accompanying the 1935 amendments stating that this language was added to "make it clear that [section 21] does not prohibit any financial institution or private banker from engaging in the securities business to the limited extent permitted to national banks under [section 16]." H.R.Rep. No. 742, 74th Cong., 1st Sess. 16 (1935). The Report goes on to say parenthetically that this provision permits commercial banks to deal in or underwrite only certain enumerated government obligations not at issue in this case. Id. SIA has suggested that the overlap between sections 16 and 21 is restricted to this narrow context, and that we must affirm the district court if we find, as SIA argues, that the language of section 21 covers the transaction permitted by the Board in this case.

SIA's argument is wholly unpersuasive for several reasons. First, the House Report said that the cross-reference to section 16 was being added to "make it clear" that commercial banks could underwrite and deal in certain government obligations, and the title of the relevant passage in that Report was "Section 21 of the Banking Act Clarified." H.R.Rep. No. 742, supra, at 16. That this amendment sought merely to clarify the relationship between section 16 and section 21 necessarily implies that before the amendment the two provisions by their own force had to be read together. Congress amended section 21 simply to leave no doubt of the need to read the two sections harmoniously in a matter of particular congressional concern. Moreover, apart from this apparent purpose, the sweeping and comprehensive language employed explicitly provides that any restriction on the activities of a commercial bank that may arise because of the prohibitions of section 21 is relieved insofar as the activity is permitted by section 16. This unambiguous language controls our reading of the statute.

We reject SIA's position for a second and independently decisive reason. If section 21 prohibited what section 16 explicitly permits, section 21 would render section 16's permissive language entirely nugatory--an absurd result. Section 16 allows a commercial bank to sell securities "without recourse, solely upon the order, and for the account of, customers, and in no case for its own account." Section 21, in sharp contrast, flatly prohibits a commercial bank from "selling" securities. If we permitted the restrictions of section 21 to control, the "selling" of securities would be entirely proscribed, despite the explicit permission contained in the statute. If, on the other hand, we read section 16's permissive provisions as an exception to section 21, the restriction on selling in section 21 would retain its force for all activities not permitted by section 16. We must therefore read section 21's operative terms (issuing, underwriting, selling, distributing) to exclude any activity section 16 allows. (We discuss below the prohibition of underwriting by a commercial bank contained in section 16 itself.)

Finally, because the Supreme Court has stated that sections 16 and 21 "seek to draw the same line" between commercial and investment banking, SIA, 468 U.S. at 149, 104 S.Ct. at 2986, those activities of commercial banks that section 16 places on the acceptable commercial banking side of the line cannot be placed by section 21 on the impermissible investment banking side of the line. Thus, if the Board reasonably found that section 16 permits Bankers Trust's activities, our inquiry ends there.

We believe that the Board's determination is reasonable. The Board found that Bankers Trust's activities fell within section 16's requirement that "[t]he business of dealing in securities and stock by the [bank] shall be limited to purchasing and selling such securities and stock without recourse, solely upon the order, and for the account of, customers, and in no case for its own account, and the [bank] shall not underwrite any issue of securities or stock." 12 U.S.C. Sec. 24 (Seventh) (1982). While the district court did not dispute the Board's finding that Bankers Trust's activities "fit neatly within the literal language of section 16's permissive phrase," and relied instead on an analysis of the legislative purposes of the Act to reverse the Board's holding, see Securities Indus. Ass'n v. Board of Governors, 627 F.Supp. at 701-02, SIA vigorously disputes on several grounds the conclusion that the bank's activities come within the permissive language of that section. We take up these arguments in turn.

SIA argues that section 16's permissive language does not apply to the activities of Bankers Trust because the section 16 exception applies only to "the business of dealing in securities and stock," while SIA asserts that the term "dealing" is typically understood to encompass the purchasing and selling of securities only in the secondary trading market. In support of this argument, SIA cites the definition of "dealer" contained in the Securities Act of 1933. In fact, the Securities Act undercuts SIA's position by defining a "dealer" as "any person who engages ... as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person," without any exclusion of the primary offering market. 15 U.S.C. Sec. 77b(12) (1982). Moreover, the so-called "dealer's exemption" to registration of securities under the Securities Act makes it clear that one may be a dealer under that statute in both secondary and primary markets. This exemption from registration, contained in section 4(3) of the Securities Act, 15 U.S.C. Sec. 77d(3) (1982), applies to "transactions by a dealer (including an underwriter no longer acting as an underwriter in respect of the security involved in [the] transaction)." This language necessarily implies that one may be a dealer--"in the business of offering, buying, selling, or otherwise dealing or trading in securities"--and still act as an underwriter--one who unquestionably may participate in the primary or new issue market. Congress' ordinary understanding of "the business of dealing" clearly was not restricted to secondary trading; SIA's argument on this point is unsupportable.

SIA also contends that the Board erred in concluding that the activities of Bankers Trust are "upon the order ... of ... customers," claiming that Congress imposed this restriction to make it clear that banks could perform the transactions permitted by section 16 only as an accommodation to the existing customers of the bank. In support of this proposition, SIA relies almost exclusively on the Supreme Court's recent opinion in Schwab, in which SIA unsuccessfully challenged a bank holding company's retail brokerage operations under section 20 of the Glass-Steagall Act. See 12 U.S.C. Sec. 377 (1982) (prohibiting bank affiliation with any firm "engaged principally in the issue, flotation, underwriting, public sale, or distribution" of securities). In approving the retail brokerage operation, run by a non-bank affiliate of the bank holding company as an accommodation to the affiliate's customers, the Court relied in part on the fact that section 16 "allows banks to engage directly in the kind of [retail] brokerage activities at issue here, to accommodate [their] customers." 468 U.S. at 221, 104 S.Ct. at 3011. SIA suggests that this statement amounted to an interpretation of section 16 requiring banks to provide securities services under the relevant language only as an accommodation to the bank's preexisting customers. This argument misses the mark. While the Court did state that section 16 permitted retail brokerage as an accommodation to customers of the bank's other services, it specifically left open the question whether such securities brokerage, if more broadly available, would still satisfy that provision. Id. at 219 n. 20, 104 S.Ct. at 3011 n. 20. Thus, the Court did not, as we must, decide whether section 16 allows the placement of securities only as an accommodation to existing customers of other bank services.

While the meaning of "upon the order ... of ... customers" is decidedly ambiguous, we defer, as Chevron requires, to the Board's reasonable conclusion that section 16 should not be given such a narrow reading. The Board below correctly observed that "[n]othing in the literal terms of section 16 requires a preexisting customer relationship." Board Statement at 16, J.A. at 210. According to SIA, however, the legislative history makes it clear that Congress had such a relationship in mind when it included the language "upon the order, and for the account of, customers." In support of its thesis, SIA directs us to a remark in the committee reports that the purpose of section 16 was to permit "[n]ational banks ... to purchase and sell investment securities for their customers to the same extent as heretofore." S.Rep. No. 77, 73d Cong., 1st Sess. 16 (1933); H.R.Rep. No. 150, 73d Cong., 1st Sess. 3 (1933). Because the Supreme Court in Schwab stated that "[b]anks long have arranged the purchase and sale of securities as an accommodation to their customers," and that section 16, read in conjunction with the above-cited legislative history, "expressly endorsed this traditional banking service," 468 U.S. at 215, 104 S.Ct. at 3008, SIA contends that section 16 was intended only to permit such services as had been traditionally performed as an accommodation to preexisting customers of the bank.

SIA again reads too much into Schwab. Congress, in enacting section 16, may well have intended to endorse traditional banking services as they existed before 1933. This does not mean, however, that section 16 permits the transactions covered by its language only to the extent that identical transactions occurred prior to the enactment of Glass-Steagall. Since nothing in the language or legislative history of section 16 even remotely suggests that the Act meant to freeze particular functions in place as of 1933, we decline to read that meaning into the Act.

Moreover, the history of commercial banking shows that, prior to the Glass-Steagall Act, banks offered the securities brokerage services at stake in Schwab both to existing customers and to persons with no preexisting relationship to the banks. See Securities Indus. Ass'n v. Comptroller of the Currency, 577 F.Supp. 252, 255 (D.D.C.1983), aff'd per curiam, 758 F.2d 739, 740 (D.C.Cir.1985) (affirmed "generally for the reasons stated" by district court), cert. denied, --- U.S. ----, 106 S.Ct. 790, 88 L.Ed.2d 768 (1986); see also Greenfield v. Clarence Sav. Bank, 5 S.W.2d 708, 708-09 (Mo.Ct.App.1928) (transaction in which plaintiff, having no account with the bank, "went there with the sole purpose of purchasing bonds as an investment"); Smith, Stock Market Service Comes High, Am.Bankers A.J. 965 (Apr. 1929) (bank will "buy and sell securities for its customers and the public in general"). Thus, we may not construe "upon the order ... of ... customers" to require a preexisting relationship between the bank and the user of the services permitted under section 16, since Congress intended that language to ratify banking practices that served at least some persons without any relationship to the bank except as "customers" of the services permitted by section 16.

Despite the conclusion that section 16 requires no preexisting customer relationship as a matter of law, we still must inquire whether the Board reasonably concluded that Bankers Trust places commercial paper solely on the order of the issuer. The Board stated that "[a]ccording to Bankers Trust's submission, the issuer, not the bank, decides whether to raise funds by issuing commercial paper and, if so, in what amount." Board Statement at 15-16, J.A. at 209-10. The Board concluded that this meant that "the bank places commercial paper solely on the request and on the order of its customer, the commercial paper issuer." Id. at 18, J.A. at 212. SIA counters that the bank solicits the business of issuers and gives financial advice about the terms and timing of the potential issue of commercial paper. Neither point upsets the Board's conclusion.

SIA offers no support for its claim that Bankers Trust recruits or solicits the business of issuers beyond the assertion that the bank "touts" its placement services in advertisements.1 "Touting" is not enough to render the Board's conclusion unreasonable. Although the bank may generally solicit customers for its placement services by making it known that such services are available, either in the so-called "tombstone ads" or in more general advertisements (for example, "What do you get when you combine an investment bank with a commercial bank? Bankers Trust Company."), any given placement of commercial paper still takes place solely on the order of the customer. We illustrate by analogy. The Supreme Court in Schwab stated that section 16 permitted banks to engage in retail brokerage operations at least as to their own customers. Even if we assume that a bank makes its retail brokerage operations available only to its depositors, it still must find some way to let them know that these services are available. It would strain credulity to assert that the circulation of a brochure or the running of an advertisement to publicize the availability of these services would mean that the brokerage services performed are now barred since no longer performed solely upon the order of the customer.

Nor are we convinced that the rendering of financial advice itself removes Bankers Trust's placements from the category of transactions made solely upon the order of customers. Nothing in section 16 suggests that the bank may not advise issuers who have decided that they may or do want to raise money by issuing commercial paper. If a customer asks the advice of Bankers Trust but makes its own decision about whether and in what amount to issue commercial paper, the transaction is made solely on the order of that customer. Consider, by contrast, a case in which an investment bank decides that the market is favorable to the refinancing of a bond issue or the conversion of debt to equity and initiates discussions with its customer leading up to the eventual transaction. In such a situation, the initiative of the investment banker itself creates the very demand for the particular transaction. This is a far cry from the type of passive advice that Bankers Trust renders after the issuer has decided that it needs to raise capital and must only decide the best way to do it. Indeed, the legislative history provides support for just this distinction, evincing a concern about bankers who found it "necessary ... to seek for customers to become makers of issues of securities when the needs of those customers for long-term money were not very pressing." 75 Cong.Rec. 9911 (1932) (remarks of Sen. Bulkley). We cannot conclude that the Board acted unreasonably in deciding that the danger identified by Senator Bulkley does not characterize the financial advice rendered by Bankers Trust.

SIA also argues that, because section 16 applies both to "purchasing and selling" of securities, the solicitation of buyers of commercial paper by Bankers Trust means that its activities are not "upon the order ... of ... customers." This argument is meritless. Since Bankers Trust acts as sales agent for the issuer, it is clearly engaged in "selling" securities for its customers and necessarily finds and solicits buyers for those securities, buyers who may be customers of other bank services. This does not mean, however, that Bankers Trust is "purchasing" securities for those investors who buy the paper. The buyers decide upon and make their own purchases, while Bankers Trust has an explicit policy against purchasing for any account that it manages, advises, or serves as trustee--the only accounts for which the bank would even have the authority to make such purchases.2

Moreover, no sensible construction of the statute could say that otherwise permissible selling activities cannot involve the solicitation of buyers. The seller's very purpose in engaging a selling agent and paying a commission is to acquire that agent's superior ability to place the product with buyers. If placement of the product with buyers did not require any solicitation of buyers, no rational business would pay another firm to do what it could without cost to itself: passively wait for orders. This construction of "upon the order ... of ... customers," therefore, would lead to the absurd statutory result of allowing a seller-agent relationship to arise only in circumstances that not only would never actually exist but that also would strip the relationship itself of its purpose. The Board's rejection of such a construction appears eminently reasonable.

The final assault on the Board's conclusion that the activities of Bankers Trust fit within the terms of section 16 suggests that these activities amount to "underwriting" and thus divest Bankers Trust of its exemption. Although the Act and its legislative history are barren of any definition of the term "underwriting," the parties and the district court have spent much effort considering whether the term "underwriting" includes agency, as well as principal, transactions, and whether what is commonly called "best efforts" underwriting, in which the selling group assumes none of the risk of its failure fully to distribute the issue, amounts to statutory underwriting for purposes of the exemption.3 These efforts were needless, since we find that the Board reasonably concluded that an "underwriting" defeats the section 16 exemption only if it includes a public offering; private placements therefore do not for this purpose constitute statutory "underwriting." The Board's reliance on the distinction between public offerings and private placements is reasonable because the distinction derives support from congressional intent embodied in contemporaneous securities legislation and reasonably relates to concerns that the Glass-Steagall Act sought to meet.

1. Contemporaneous Securities Legislation --The Glass-Steagall Act nowhere defines "underwriting," and the legislative history contains nothing to clarify the term. When in SIA the Supreme Court reviewed the case we now consider on remand, similar ambiguity surrounded the definition of the terms "security" and "note." The Court in SIA made it very plain that the meaning of a term in other legislation passed roughly at the same time as the Glass-Steagall Act with the shared purpose of restoring confidence in the nation's financial markets provided "considerable evidence" of the "ordinary meaning" Congress attached to the same term in the Glass-Steagall Act itself. SIA, 468 U.S. at 150, 104 S.Ct. at 2987. The statutes to which the Court resorted in discerning congressional understanding of the term "security" were the Securities Act of 1933, 15 U.S.C. Sec. 77a et seq. (1982), the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78a et seq. (1982), and the Public Utility Holding Company Act of 1935, 15 U.S.C. Sec. 79 et seq. (1982). SIA, 468 U.S. at 150, 104 S.Ct. at 2987. In each of these statutes, the sweeping definition of "security" encompasses commercial paper; the Court accordingly found that when Congress meant to exempt commercial paper from the strictures of one of these statutes, it expressly so provided. Id. at 150-51, 104 S.Ct. at 2987. Congress, the Court concluded, understood "that, unless modified, the use of the term 'security' encompasse[d] [commercial paper]." Id. at 151, 104 S.Ct. at 2987.

Only the Securities Act of 1933 defines the term "underwriter" (although the Securities Exchange Act of 1934 provides useful evidence on the meaning of that term as used in the Securities Act). While the evidence of the ordinary congressional cognizance of the term "underwrite" or "underwriter" thus comes from only one piece of similar legislation, that legislation, the Securities Act of 1933, is the closest to Glass-Steagall in time and purpose of the various statutes relied on in SIA. The Securities Act and the Glass-Steagall Act were signed into law within three weeks of each other and both statutes were among the legislative reforms that marked President Roosevelt's first hundred days in office. Thus, while the precise purposes of the Securities Act and the Glass-Steagall Act may differ, both emerged from the same effort to restructure the American financial markets; absent any contrary indication, we must consider Congress' understanding of the financial terms it used in one statute highly relevant to discovering the meaning attached to similar but ambiguous terms in the other. With that rule in mind, we turn to the Securities Act of 1933.

SIA contends that the significance of the Securities Act for this case is that it provides an express exemption from registration for "transactions by an issuer not involving any public offering." 15 U.S.C. Sec. 77d(2) (1982). SIA asserts that this exemption demonstrates Congress' ability knowingly to provide an exemption from statutory requirements for private offerings; Congress' failure so to provide in section 16 of the Glass-Steagall Act means that the Board acted unreasonably when by interpreting the term "underwrite" it effectively read such a private offering into the Act. This point would have considerable force, except that the history of the Securities Act's exemption betrays SIA's argument and, in fact, est