[Federal Register Volume 60, Number 220 (Wednesday, November 15, 1995)]
[Notices]
[Page 57429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28142]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
Huntington Bancshares Incorporated; Request for an Exemption from
Tying Provisions
Huntington Bancshares Incorporated, Columbus, Ohio (Huntington),
has requested, pursuant to section 106(b) of the Bank Holding Company
Act Amendments of 1970 (12 U.S.C. 1971 et seq.) (``section 106''), that
the Board grant an exemption to permit Huntington or any of its bank or
nonbank subsidiaries to vary the consideration charged for a floorplan
loan to an automobile dealership based on the percentage of retail
paper financing originated by the dealership on behalf of
Huntington.\1\ According to Huntington, a ``floorplan loan'' is a loan
or line of credit provided to an automobile dealership to finance the
acquisition of the dealer's inventory for sale to the general public,
and ``retail paper financing'' means financing provided to consumers
seeking to purchase an automobile from the dealer's inventory.\2\
Huntington indicates that floorplan loans and retail paper financing
will remain separately available to customers at market prices.
\1\ Huntington has requested that any exception granted by the
Board be broad enough to cover dealers in goods other than
automobile dealerships who may finance their inventory through
floorplan lending.
\2\ For purposes of this proposal, retail paper financing may
consist of either: (1) a retail installment contract or similar
instrument between the purchaser and the dealer which is then
assigned to Huntington; or (2) a direct obligation between the
purchaser and Huntington originated on Huntington's behalf by the
dealer.
---------------------------------------------------------------------------
Section 106 generally prohibits a bank from varying the
consideration charged for any product or service, including an
extension of credit, on the condition or requirement that: (1) a
customer obtain some additional credit, property, or service from such
bank, other than a loan, discount, deposit, or trust service (so
called, ``traditional bank products'') (See 12 U.S.C. 1972(1)(A));\3\
or (2) a customer provide some additional credit, property, or service
to such bank, other than those related to and usually provided in
connection with a loan, discount, deposit, or trust service. (See 12
U.S.C. 1972(1)(C)). The Board may, by regulation or order, grant
exceptions that are not contrary to the purposes of the section.
\3\Section 106 also prohibits a bank from varying the
consideration charged for any product or service on the condition or
requirement that a customer ``obtain'' some additional credit,
property or service from an ``affiliate'' of such bank. See 12
U.S.C. 1972(1)(B).
---------------------------------------------------------------------------
Huntington argues that the proposed tying arrangement should be
permissible under the statutory exceptions discussed above as well as
exceptions contained in the Board's anti-tying rules. 12 CFR 225.7.
However, Huntington is seeking an exemption from section 106 to clarify
whether retail paper financing may be characterized as either a
traditional bank product so that the proposal is consistent with the
exception contained in 12 U.S.C. 1972(1)(A), or as a practice related
to and usually provided in connection with a floorplan loan so that the
proposal is consistent with the exception contained in 12 U.S.C.
1972(1)(C).
Even if the proposal does not fall within the literal terms of
exceptions to the prohibitions contained in section 106, Huntington
believes that the proposed package arrangement is not anticompetitive
and is generally offered by Huntington's nonbank competitors who are
not subject to section 106. Huntington also argues that the market for
floorplan loans and retail financing services is national in scope and
highly competitive, and that Huntington does not possesses sufficient
market power in any relevant market to impair competition in that
market. Furthermore, Huntington believes that the proposal is
consistent with Congressional intent that section 106 not interfere
with a customer's ability to negotiate the price of multiple banking
services with a bank on the basis of the customer's entire relationship
with the bank.\4\ Finally, Huntington asserts that the proposal will
promote competition because automobile dealerships may obtain floorplan
lending and retail paper financing from other financial institutions,
and there is no requirement that consumers finance their vehicle
purchase through this arrangement.
\4\ S. Rep. No. 1084, 91st. Cong., 2d Sess., 16-17 (1970).
---------------------------------------------------------------------------
Notice of Huntington's request is published in order to seek the
views of interested persons on the issues presented by the request and
does not represent a determination by the Board that the request meets
or is likely to meet the standards of Section 106. The request may be
inspected at the offices of the Board of Governors or at the Federal
Reserve Bank of Cleveland.
Any comments or requests for hearing should be submitted in writing
and received by William W. Wiles, Secretary of the Board of Governors
of the Federal Reserve System, Washington, DC 20551, not later than
December 12, 1995.
Board of Governors of the Federal Reserve System, November 7,
1995.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 95-28142 Filed 11-14-95; 8:45 am]
BILLING CODE 6210-01-F
