FDIC WINS ITS “MADDEN-FIX” LAWSUIT

FDIC WINS ITS “MADDEN-FIX” LAWSUIT

Following its ruling upholding the OCC’s Madden-fix rule, the District Court for the Northern District of California has likewise ruled in favor of the Federal Deposit Insurance Corporation’s (“FDIC”) cross-motion for summary judgment, upholding the FDIC’s parallel Madden-fix rule. See Order Resolving Cross-Motions for Summary Judgment, California v. Federal Deposit Insurance Corporation, No. 20-cv-05860-JSW (N.D. Cal. filed Feb. 8, 2022); see also our ALERT of Feb. 10, 2022. In 2020, seven states and the District of Columbia (“Plaintiffs”) sued the FDIC challenging the validity of the FDIC’s rule, titled Federal Interest Rate Authority Rule (“Rule”), that was promulgated in the wake of the U.S. Court of Appeals for the Second Circuit’s ruling in Madden v. Midland Funding, LLC, 786 F.3d 246 (2d Cir. 2015), cert. denied, 136 S. Ct. 2505 (2016). See our ALERTS of Sep. 26, 2019 and June 26, 2020. The FDIC’s Rule similarly provides that the determination regarding the permissibility of interest on a loan occurs as of the date the loan was made and will not be affected by the sale,assignment or other transfer of a loan. 12 C.F.R. § 331.4(e). Read More