In Watters v. Wachovia Bank, N. A. (2007) 550 U.S. 1, the Supreme Court was faced with the question of whether national banks' "operating subsidiaries" (which are state-chartered entities) are properly regulated by state regulators via licensing schemes, reporting requirements, and visitorial powers (the last being the regulatory power to conduct audits and surveillance of the regulated entity). (Watters, supra, 550 U.S. at p. 7.) The court reiterated: "States are permitted to regulate the activities of national banks where doing so does not prevent or significantly interfere with the national bank's or the national bank regulator's exercise of its powers. But when state prescriptions significantly impair the exercise of authority, enumerated or incidental under the NBA, the State's regulations must give way." (Id. at p. 12.) The Supreme Court concluded that, because national banks were authorized by statute and regulation to do business through non-bank-operating subsidiaries and because federal law vested visitorial powers over national banks solely to the OCC, national banks' operating subsidiaries are subject solely to the visitorial oversight of the OCC and not state regulators. (Id. at pp. 20-21; see 12 U.S.C. 484(a) "No national bank shall be subject to any visitorial powers except as authorized by Federal law ...".) The Supreme Court's interpretation comported with 12 Code of Federal Regulations part 7.4006 (2010), which provides that state laws applied to operating subsidiaries " 'to the same extent that those laws apply to the parent national bank' " (Watters, at p. 20), but the court explicitly declined to clarify whether the OCC's regulation was owed any deference. (Id. at p. 21.)