21-93 A bank threatens to credit ration unless the customer agrees to let the bank's securities affiliate do its securities underwritings.Identify the conflict of interest in this scenario.

Question

Quizplus · Accepted Answer

The conflict of interest in this scenario is tie-ins, where the bank is pressuring the customer to agree to let their securities affiliate do underwriting in exchange for granting credit. This creates a potential conflict of interest as the customer may be agreeing to something they wouldn't otherwise do, just to receive the credit they need.

21-93 a Bank Threatens to Credit Ration Unless the Customer