[sugar and spice]

Actually, essentially they can.

My school, which is a public university, does not allow local sororities or fraternities. I think this is true of many of the big state schools. It's just too much of a risk management problem, since if something goes wrong, the school will be held responsible. At least with national organizations, they know somebody else is watching out for that kind of thing -- or should be, at least.

Of course, the school can't force the sorority or fraternity to disband; it's in their constitutional rights to be able to meet as a group. But the school can forbid them to advertise on campus, participate in formal rush, be a part of IFC or Panhel, display letters on a house (at some schools, the school itself owns the Greek houses!), be listed in the student organization directory, etc. These things can go far towards killing off a group -- most people don't want to deal with the kind of extra work that being an unrecognized fraternity or sorority will bring.