After reviewing the legal foundation for federal preemption of state law limits on interest, we discuss the OCC’s proposed approach for determining when a bank is the “true lender” in programs with non-bank agents, our arguments in support of the proposal made in our comment letter to the OCC, key arguments made in support of or against the proposal by other commenters, the OCC’s likely next steps, and the 2020 election’s potential impact.… Continue Reading

We recently published a blog about the OCC’s proposed rule “National Banks and Federal Savings Associations as Lenders” (the “Proposed Rule”), which would clarify that a bank (or savings association) is properly regarded as the “true lender” when, as of the date of origination, it is named as the lender in a loan agreement or funds the loan. … Continue Reading

Ballard Spahr LLP has submitted a comment letter to the OCC in support of its proposed rule, “National Banks and Federal Savings Associations as Lenders” (the “Proposed Rule”). As detailed in our letter, we applaud the Proposed Rule, which would establish a clear and logical bright line confirming and clarifying that a bank (or savings association) is properly regarded as the “true lender” when, as of the date of origination, the bank is named as the lender in a loan agreement or funds the loan.… Continue Reading

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. … Continue Reading

Less than two months after issuing its final “Madden fix” rule, the OCC has now issued a proposed rule to address when a national bank or federal savings association should be considered the “true lender” in the context of a third party relationship.  Comments on the proposal, which was published in today’s Federal Register, must be filed by September 3, 2020.… Continue Reading

The Office of the Comptroller of the Currency (OCC) has issued a bulletin (2023-37) that provides guidance on managing risks associated with “buy now, pay later” (BNPL) lending.  The BNPL loans addressed in the bulletin are loans that are payable in four or fewer installments and carry no finance charges.

The bulletin cautions banks about the risks to banks and consumers associated with BNPL lending. … Continue Reading

The Connecticut Department of Banking (the “Department”) issued a guidance letter on September 11, 2023 (the “Guidance”) providing its position regarding the amendments to Connecticut’s Small Loan Lending and Related Activities Act (the “Act”) that become effective on October 1, 2023. We previously blogged about these amendments here.

The Department issued this guidance “to assist industry participants in evaluating the need for licensure and the effect of the various requirements under [the amended law].”… Continue Reading

The Treasury Department has released a report entitled “Assessing the Impact of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.”  The report was issued in response to President Biden’s July 2021 Executive Order on promoting competition.  That Order directed the Secretary of the Treasury to issue a report assessing how the entry of large technology firms and other non-banks into consumer finance markets has affected competition.… Continue Reading

In a letter dated October 11, 2022 to Acting Comptroller Michael J. Hsu, Patrick McHenry, the ranking member of the U.S. House of Representatives Committee on Financial Services, and four other Republican representatives, asked Mr. Hsu to respond to pointed questions about the OCC’s planned role in support of bank-fintech partnerships. … Continue Reading