On May 30, the Supreme Court issued its opinion in Cantero v. Bank of America, N.A., in which the Court was set to decide whether national banks must comply with state interest-on-escrow laws (and by extension, certain other state laws). Rather than providing a clear preemption standard, the Court sent the issue back to

State-chartered banks lending to Iowa residents will want to take note of an Assurance of Discontinuance entered into in December between the State of Iowa and an out-of-state bank to settle claims that the bank charged usurious rates of interest to Iowa consumers. The settlement also highlights the Iowa Attorney General’s interpretation of the state’s

On Friday, the United States Office of the Comptroller of the Currency (“OCC”) finalized a regulation regarding the “Permissible Interest on Loans that are Sold, Assigned, or Otherwise Transferred” by national banks and federal savings associations. Initially proposed in November 2019, the regulation provides that interest on a loan that is permissible under provisions of federal banking laws establishing the interest authority of national banks and federal savings associations is not affected by a sale, assignment, or transfer of the loan—effectively permitting subsequent holders of loans originated by OCC-regulated entities to take advantage of the originators’ “Interest Exportation Authority.” The rule will be effective 60 days after publication in the Federal Register.
Continue Reading The OCC Finalizes “Madden Fix” Regulation, Codifying the “Valid-when-Made” Doctrine as Applicable to Loans Made by National Banks and Federal Savings Associations

A United States Magistrate Judge for the United States District Court, Western District of New York, today issued his report and recommendation on the defendants’ motion to dismiss in Petersen et al. v. Chase Card Funding, LLC et al., No. 1:19-cv-00741 (W.D.N.Y. June 6, 2019). The Magistrate Judge recommended dismissal of both the plaintiff’s

On Tuesday (September 3, 2019), the U.S. District Court for the District of Columbia issued an order dismissing a lawsuit filed by the Conference of State Bank Supervisors (CSBS) seeking to block the Office of the Comptroller of the Currency (OCC) from issuing federal charters to fintech companies. As explained in a prior blog post

On Thursday (May 2, 2019), a federal district court in the Southern District of New York issued an order allowing the New York Department of Financial Services (DFS) to proceed with a lawsuit seeking to block the Office of the Comptroller of the Currency (OCC) from issuing federal charters to fintech companies. As explained in

On Monday, a federal district court judge in the District of Columbia issued an order dismissing a lawsuit brought by the Conference of State Bank Supervisors (CSBS) regarding a proposal of the Office of the Comptroller of the Currency (OCC) to issue federal charters to certain Fintech firms. In dismissing the case, US District Court Judge Dabney L. Friedrich held the CSBS did not have standing to sue because the OCC had not yet officially decided to issue charters to Fintech companies. Judge Friedrich explained that the CSBS lacks standing to bring the suit because the harms it alleges are “contingent on whether the OCC charters” a Fintech company, and “[s]everal contingent and speculative events must occur before the OCC” issues such a charter.
Continue Reading Federal Court Dismisses “Speculative” and “Attenuated” Lawsuit By the Conference of State Bank Supervisors Over Proposed OCC Fintech Charter

The US Court of Appeals for the Ninth Circuit’s recent decision in Lusnak v. Bank of America, N.A.—holding that the National Bank Act did not preempt a California law requiring banks to pay interest on certain funds held in escrow accounts for mortgage borrowers—has received considerable attention in the consumer finance industry. Bank of

On Tuesday, a federal district court in the Southern District of New York issued an order dismissing a lawsuit brought by the New York Department of Financial Services (NYDFS) regarding a proposal of the Office of the Comptroller of the Currency (OCC) to issue federal charters to certain fintech firms. In dismissing the case, U.S.

A complaint filed March 23 by the bankruptcy trustee for Lam Cloud Management, LLC in the United States Bankruptcy Court for the District of New Jersey challenges two small business financing models: (i) merchant cash advances (“MCAs”); and (ii) small business loans originated under bank partnerships.  While disposition of the complaint will take time, and all that is available for now are bare allegations, the complaint is another recent challenge involving usury and bank partner programs and warrants attention from entities involved in small business financing and lending.
Continue Reading NJ Bankruptcy Case Takes Aim at Small Business Financing — Merchant Cash Advances and Bank Partnerships