SFA released a statement earlier today applauding Friday’s announcement from the Office of the Comptroller of the Currency on a final rule clarifying that “when a national bank or savings association sells, assigns, or otherwise transfers a loan, interest permissible before the transfer continues to be permissible after the transfer.”

“Since the Madden case that clouded the certainly of a nearly 200 year legal doctrine, we have long advocated for clarification that a loan’s interest rate remains legally intact if the loan is sold, so we appreciate that Acting Comptroller Brooks has addressed market uncertainty and finalized this rule,” said Michael Bright, CEO of the Structured Finance Association. “Loans transferred through a securitization, sale or otherwise significantly expands access and lowers the cost of credit to American consumers while also ensuring national banks and saving associations can manage credit risk in a safe and sound manner. Without this rule, Madden and the more recent complaints filed in the federal district courts in the Eastern and Western Districts of New York against the credit card securitization programs of two of the largest national banks, the multi-trillion dollar U.S. origination, securitization, and secondary markets would continue to be threatened. We thank the OCC team for their hard work on this issue.”

SFA has been very active advocating on this issue. This January, we submitted a joint letter with the Bank Policy Institute (BPI) to the OCC on its valid-when-made proposed rule, and in February, SFA and BPI submitted a joint letter to the Federal Deposit Insurance Corporation (FDIC) supporting FDIC’s efforts to address marketing uncertainty due to the Madden ruling. In 2019, SFA filed amicus briefs in support of association members Chase and Capital One highlighting the potential negative impact on lending markets and the cost of availability of credit for U.S. consumers and businesses.

If you would like to read more about SFA’s involvement on this topic, please visit our website here.