In an order issued August 12, 2020, the United States District Court for the District of Colorado relied on the OCC’s “Madden fix” rule to hold that, under Section 27 of the Federal Deposit Insurance Act, 12 U.S.C. § 1831d, a promissory note with an interest rate that was valid when made remains valid upon assignment to a non-bank. However, the court concluded that the plaintiff had not had a fair opportunity to develop facts germane to the “true lender” issue left open by the OCC rule and it accordingly remanded the case to the bankruptcy court for further proceedings.
The district court’s order is the first decision we have seen addressing either the OCC’s or the FDIC’s Madden fix. It highlights the need for further rulemaking by the OCC and the FDIC on the true lender issue. As previously reported , the OCC has commenced such rulemaking but the FDIC has not. We will follow closely further developments in the rulemaking and this case.