The Propriety of Benefit-Spreading Regulations Under the 10% Lending Limit of the National Bank Act

Authors

Michigan Law Review, University of Michigan Law School

Abstract

This Note examines whether the ten percent lending limit of the National Bank Act should be used to promote benefit-spreading. Section I evaluates the legislative and judicial history of the lending limit and concludes that Congress never intended the Comptroller to issue regulations to foster benefit-spreading. Section II examines the practical ramifications of the benefit-spreading regulations. It concludes that the lending limit cannot effectively foster benefit-spreading without undermining the risk-reducing function of the statute; that compliance with the benefit-spreading regulations is costly while the penalties for noncompliance are inappropriate and unfair; and that existing statutes better promote benefit-spreading while avoiding the pitfalls of the section 84 regulations. The Note therefore concludes that the Comptroller should retract the benefit-spreading regulations. Until he does so, courts should ignore the regulations and Congress should repudiate the use of section 84 for benefit-spreading.

Recommended Citation

Michigan Law Review, The Propriety of Benefit-Spreading Regulations Under the 10% Lending Limit of the National Bank Act, 78 Mich. L. Rev. 1153 (1980).
Available at: https://repository.law.umich.edu/mlr/vol78/iss7/5