BusinessWeek: January 11, 1993

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AN OBSCURE BANK LAW COULD BRING A BONANZA

Deep in the article "Money with strings attached" (Finance, Dec. 21) is an essential point concerning alleged bank tie-ins that should not be missed. Tying by banks is subject to a unique legal prohibition that gives any corporate bond issuer or borrower that feels victimized the right to sue for treble damages.

Investment banks and others that compete directly with commercial banks can tie identical packages of services but are not covered by this prohibition or its treble-damage provision. It is noteworthy that these allegations against banks come primarily from a few companies involved in legal disputes with banks, either for nonpayment of fees or loans, or from Morgan Stanley and its trade association. The latter is motivated to protect the oligopolistic position of a handful of securities firms from legitimate bank competition.

William H. Brandon Jr.

President

American Bankers Assn.

Washington
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