The Federal Reserve Board has gradually but steadily loosened anti-tying rules, allowing bankers to better meet customer demands.
Fed officials, lawyers, and industry consultants said they expect the central bank to continue its five-year effort to let banks offer discounts to consumers who buy multiple products.
Richard Spillenkothen, director of the Fed's division of banking supervision and regulation, said the central bank is open to further easing, although he declined to outline specific plans.
"It is a question of how much interpretive room we have," he said. "We want to be consistent with the spirit of the law."
The Fed has spent the last five years chipping away at the tying restrictions, which were implemented after Congress revised the Bank Holding Company Act in 1970.
That law prevented banks from offering discounts to customers who use more than one service, and it required banks to make every product separately available for sale. The Fed, which extended the rule to holding companies through Reg Y, exempted traditional services, such as loans and checking accounts.
The Fed, however, has since carved out additional exemptions, allowing discounted credit cards and brokerage services for bank customers. It also permits discounts when customers buy multiple nonbanking products. Finally, it allows banks to reduce the service fee for customers that hold minimum balances in a variety of securities, deposits, and loan accounts.
The Fed is expected go a step further and let banks discount loans to customers who provide services to the institution. Huntington Bancshares has requested the exemption, saying it wants to provide reduced-rate loans to car dealers who steer auto loan business its way.
If approved, the exemption would mark the sixth time in five years that the Fed has eased the tying rules, leaving only a few restrictions in place, including a ban on discounts for checking accounts held by brokerage customers.
Bankers have complained about the anti-tying rules for years, saying they unfairly restrict an institution's marketing efforts. But many institutions have not been quick to take advantage of the Fed's exemptions. Karen Shaw Petrou, president of the consulting firm ISD/Shaw Inc., said only large banks are packaging services.
Sally Miller, senior government relations counsel at the American Bankers Association, said further easing makes sense. Brokerage firms already offer discounted checking accounts to their customers, she said. Bankers need similar powers to compete effectively, she said.
Consumers are demanding the discounts, added Debra M. Jacobs, executive vice president at SunTrust Bank, Gulf Coast in Sarasota, Fla. "The reason why banks bundle products together is because people want it that way," Ms. Jacobs said. "They want extra value. They want to say, 'If I give you my checking account, what are you going to give me?'"
"Banks want to do relationship pricing," agreed Daniel W. Morton, Huntington vice president and counsel. "It is a way to reward people for doing business with you."
Tying gives banks an enormous advantage, Ms. Shaw said. Nonbanks generally sell only a few services, such as brokerage houses that offer securities and checking accounts. Banks, however, can offer a full array of financial products.
Ms. Petrou said bankers must leverage their broad product offerings to regain lost market share. They should offer discounts to convince customers to bring all their financial business to the bank, she said. The combined- balance accounts offered by Fleet Financial Group constitute a step in that direction, she said. Fleet offers a discount to customers who maintain a minimum balance in a variety of loan, deposit, and securities accounts.
The trick is to offer an affordable bundle that meets all of a customer's needs. Venkatesh Shankar, a University of Maryland marketing professor, said that isn't always easy.
"Consumers are becoming smarter," Mr. Shankar said. "They know what returns they are getting on different products."
