The Limited, Inc., and Consolidated Subsidiaries - Page 5

                                        - 5 -                                         

          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.                                              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011