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Depository Institutions: Contracting Practices With Data Processing Servicers

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Report Type Reports and Testimonies
Report Date Feb. 5, 1992
Report No. GGD-92-19
Subject
Summary:

Concerned that certain practices--such as vendors buying stock or making deposits in an institution or buying the institution's assets at an inflated rate--were being imposed as a condition of contract awards for various services, Congress prohibited financial institutions from entering into contracts for goods and services that could harm the safety and soundness of an institution. Congress was also concerned that these practices could have an anticompetitive effect, with large data processing vendors gaining an unfair competitive advantage over small firms. This report looks at (1) whether insured depository institutions are entering into contracts meeting the above description and (2) the extent to which such practices have an anticompetitive effect and should be prohibited.

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