Mills Company, Inc., is a manufacturing company with a working capital line of credit from First National Bank. The credit agreement governing the loan states that Mills cannot obtain additional unsecured credit without the approval of the bank. Mills believes that such a clause violates the Bank Holding Company Act's anti-tying clause. Does it?

Question

Quizplus · Accepted Answer

The clause is related to the soundness of the credit, which is a legitimate concern for the bank to ensure that Mills does not overextend itself financially, thus protecting the bank's interests.