OCC’S “MADDEN-FIX” RULE UPHELD

The District Court for the Northern District of California has ruled in favor of the Office of the Comptroller of the Currency’s (“OCC”) cross-motion for summary judgment, upholding the OCC’s “Maddenfix” rule and the so-called “valid-when-made” principle. See Order Resolving Cross-Motions for Summary Judgment, California v. Office of the Comptroller of the Currency, No. 20-cv-05200-JSW (N.D. Cal. filed 02/08/22). In 2020, California, Illinois and New York (“Plaintiffs”) sued the OCC challenging the validity of the OCC’s final rule titled Permissible Interest on Loans That Are Sold, Assigned or Otherwise Transferred (“Final Rule”), which was promulgated in response to uncertainty surrounding the valid-when-made doctrine in the wake of the ruling of the U.S. Court of Appeals for the Second Circuit 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 Final Rule provides that interest on a loan that is permissible under 12 U.S.C § 85 (“Section 85”) shall not be affected by the sale, assignment or other transfer of the loan. 12 C.F.R. § 7.4001(e). Read More