A Banking Rule for Another Era

摘要

What's so terrible? Big banks give big loans to big companies in return for a promise to do future business deals. The banks make money by selling a bundle of services, while Corporate America gets cheap loans and a bulk discount for one-stop shopping. Yet the whole transaction may be illegal. That's because a law born of antitrust concerns seven decades ago stayed on the books in 1999 when most other Depression-era restrictions on banks were swept away. The broader reforms allowed banks to do both commercial and investment banking. But banks of all stripes still are banned from making so-called tied loans, or loans granted only on the condition that a borrower agrees to buy other services. It's time to dump that rule, too. As it stands, the law applies to banks that have a dominant position in the services they provide. But in today's competitive markets, "no one bank has dominance over bank credit," says bank regulator John D. Hawke Jr., Comptroller of the Currency. The notion of widespread abuse "is one of the phoniest issues of all time," he adds. "Are we to believe that big, sophisticated borrowers are going to be coerced?" The Fed agrees. "Cross-marketing and cross-selling, whether suggestive or aggressive, are part of the nature of ordinary business dealings and do not, in and of themselves, represent a violation," it said in an Aug. 25 statement.