BPI Files Joint Amici Brief With Other Trades in California v. OCC Case on the OCC’s ‘Madden Fix’ Regulation

BPI on Jan. 21 filed a joint amici curiae brief with other finance and business trade groups calling for the U.S. District Court in the Northern District of California to affirm the OCC’s endorsement of a rule that all relevant parties to a loan sale – national bank loan originators, borrowers and secondary market loan buyers and sellers — can rely on the validity of a loan when it is originally made. In the rule at the center of the case, the OCC correctly reaffirmed that a loan free from usury, or illegally high interest rates, at the time it is made cannot become usurious in the future when sold to another lender. BPI argues in the brief that the OCC’s recent rule is consistent with longstanding precedent and resolves credit-market disruptions stemming from a 2015 Second Circuit decision in Madden v. Midland Funding, LLC that ignored the centuries-old “valid-when-made” doctrine. 
In a separate amici curiae brief, a group of 47 leading economic and finance professors discussed research finding large economic advantages to secondary market trading of loans.  The academics conclude that deviating from the OCC’s interpretation of the law by allowing out-of-state usury caps to impede loan sales would hurt income and wealth distribution in the economy.