Wells Fargo & the Bank Holding Company Act's Section 106: Exhuming § 1972 as the Antitrust Remedy to Impermissible Bundling and Tying

Abstract

In light of The People of California. v. Wells Fargo Bank, N.A., this analysis suggests that banking sales practices that incorporate impermissible forms of "bundling" are susceptible to tying claims under 12 U.S.C. § 1972, which does not require the Sherman/Clayton antitrust proofs of market power, coercion, foreclosure, anti-competitive effects, or substantial amounts of commerce. This article provides an analysis of both "impermissible tying" as well as "permissible tying" as a legitimate form of "bundling," based on this banker's experiences at major commercial and investment banks from 1990 to 2014, as well as recent litigation in Wiersum v. U.S. Bank, N.A., 785 F.3d, (11th Cir. 2015), cert. denied, 136 S. Ct. 1655 (2016). This analysis argues that, should regulators more aggressively enforce, and the judiciary more broadly construe, the Congressional intent supporting § 1972, not only would retail and wholesale bank customers receive proper protection from the type of abusive sales practices alleged in Wells Fargo, but that various operational risks addressed by Dodd-Frank would also be mitigated. Additionally, classic leverage theory, as more recently discussed by Einer Elhauge in "Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory," provides a more robust account of "credit as leverage" than the single monopoly profit theory, supporting the sound theoretical basis for § 1972, its per se rule of illegality, and the consumer welfare standard in lieu of the total welfare standard.