On February 4, 2020, BPI, along with the Structured Finance Association (SFA), offered comments to the FDIC in support of the agency’s proposed rulemaking on federal interest rate authority. The proposal mirrors that of the OCC, as both agencies seek to address the ruling by the Second Circuit in Madden v. Midland Funding, which called into question the enforceability of interest rate provisions of bank credit agreements following assignment of the loan to a nonbank. BPI and SFA expressed support for the FDIC’s proposed clarifications, which would codify the permissibility of the interest rate on a loan made pursuant to Section 27, as not being affected by any subsequent events or sales, assignments, or transfers of the loan. Further, the letter encouraged the FDIC to finalize the proposed rule as soon as possible to address uncertainty in the market and to harmonize the final rule with the parallel proposal from the OCC.
BPI Along with SFA File Comment Letter in Support of FDIC Proposed Rulemaking on “Madden Fix”
