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delinquency charges, uncollectible check fees and methods for
calculating the average daily balance of accounts.
Organization of World Financial Network National Bank
In 1986, Ralph E. Spurgin (Spurgin) joined petitioner’s
organization and became president of Limited Credit. Spurgin
believed that petitioner could increase the profitability of its
credit card operations if it could avoid the various States'
retail installment sales acts. In particular, he believed that,
if petitioner could avoid setting interest rates on a State-by-
State basis, and charge a uniform rate, it could earn an
additional $10 million dollars in revenue. Spurgin believed that
a way to avoid the States' retail installment sales acts was, in
some manner, to employ a national bank to extend credit to
customers of the stores (a bank that would not be subject to the
various States' retail installment sales acts).2
2 A national banking association is permitted to charge
interest for any extension of credit at the rate permitted by the
State in which it is located or, alternatively, a rate 1 percent
greater than the 90-day discount rate in effect in the Federal
Reserve district in which the national banking association is
located, whichever is higher. 12 U.S.C. sec. 85 (1994),
12 C.F.R. sec. 7.4001 (1999); Marquette Natl. Bank v. First of
Omaha Serv. Corp., 439 U.S. 299 (1978). Prior to the decision in
Marquette, the majority of analysts assumed that a national bank
was not permitted to export the interest rate permitted by the
State in which it was located, but, rather, was subject to the
usury restrictions imposed by each of the States in which its
credit card customers resided.
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