Usury, predatory lending, and a supposed “fix” for Madden v. Midland Funding

Georgetown law prof Adam Levitin has penned this article in American Banker (and a similar piece for Credit Slips). (The American Banker version may be behind a paywall.) State usury laws generally are preempted by the National Bank Act when a loan is held by a national bank. But, as Levitin notes, "[o]nce the note leaves the hands of a national bank, the state usury law applies as it always would."  Thus, in 2015, the Second Circuit ruled in Madden v. Midland Funding "that National Bank Act preemption of state usury laws applies only to a national bank, and not to a debt collector assignee of the national bank." Levitin explains that any other rule would be a very bad deal for consumers and why pending legislation to undo the general rule (and Madden), called the Protecting Consumers Access to Credit Act of 2017, should be rejected.


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