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Vanderbilt Law Review

First Page

865

Abstract

In 1956 Congress enacted the Bank Holding Company Act' (BHCA) to provide safeguards against undue concentration in the control of banking activities. Congress intended the regulations to protect the economy from anticompetitive combinations of banking and non- banking enterprises held under singular control. Still concerned with the faded "line" between banking and commerce, in 1970 Congress in- creased the scope' of the BHCA with a series of amendments, including an anti-tying provision.

Specifically, 12 U.S.C. section 1972 prohibits anticompetitive practices that "require bank customers to accept or provide some other service or product or refrain from dealing with other parties" to obtain a bank product or service.' Congress acted to counter the lender's economic power, which, by enticing customers to enter into economically disadvantageous transactions, might give the bank the ability to lessen competition." Consequently, this section prevents banks from imposing anticompetitive tying arrangements. In this manner, Congress explicitly added antitrust dimensions" to the BHCA. Like its antitrust counterparts, the anti-tying amendment provides for treble damages and the recovery of attorney's fees, thus encouraging borrowers to bring a section 1972 claim along with other fair lending claims.'

Despite the financial incentives to bring a section 1972 suit challenging onerous bank practices, few plaintiffs have brought suit under the BHCA in the first two decades of its existence. In the last several years, however, Congress has increased the incentives to employ section 1972. First, in 1989 Congress amended the statute to increase the daily fines during a violation. In addition, recent developments in Chapter 11 federal bankruptcy law have provided creditors with a legal forum to challenge banking practices. Thus, under current law, not only are the stakes higher, but borrowers also have the means and the motive to sue banks.

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