8.13.20
On Thursday, August 13, a federal court in Colorado ruled that the OCC’s new rule on interest rates on bank-sold loans is valid, but remanded a bankrupt company’s dispute over the “true lender” of the loan. In this decision in the case of Rent-Rite Super Kegs v. World Business Lenders, Judge R. Brooke Jackson of the district court said he found, “compelling” arguments raised in amicus briefs and other court decisions that federal preemption of state usury rate caps should apply to loans immediately transferred by banks to non-banks. But the OCC rule under the National Bank Act applied in the case, Jackson said. The court said that the OCC rule raised new factual questions over federal preemption that Rent-Rite should explore further, sending the case back to a bankruptcy court in the state. If the bankruptcy court determines that World Business Lenders is the true lender, then the federal preemption of state usury limits under DIDA “cannot attach,” the district court said.