OCC and FDIC Propose Rules to Override Madden v. Midland Funding, LLC: Proposed Rules Reaffirm that a Valid Interest Rate on a Loan Originated by a Bank Remains Valid After the Loan Is Sold or Assigned to a Non-Bank.

Sullivan & Cromwell LLP - November 21, 2019

On November 18 and 19, respectively, the OCC and FDIC separately issued notices of proposed rulemaking providing that when a loan originated by a national or state bank is sold, assigned, or otherwise transferred to a non-bank, the interest permissible at origination remains permissible following the transfer.  The proposed rules are designed to override the Madden decision.