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ARTICLE · 15 OCTOBER 2015

Madden v. Midland Funding LLC – Implications And Potential Responses

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This client alert focuses on the implications of the Second Circuit's decision in Madden v. Midland Funding, LLC and considers strategies for secondary market loan transactions that may mitigate its effects.

United StatesFinance and Banking
Milbank LLP
Milbank LLP
Robert Hora
Robert Hora
Albert Pisa
Albert Pisa
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This client alert focuses on the implications of the Second Circuit's decision in Madden v. Midland Funding, LLC1 ("Madden") and considers strategies for secondary market loan transactions that may mitigate its effects.

BACKGROUND AND MARKET RESPONSE

Under the National Bank Act ("NBA"), national banks may be sued for usury only if they charge an interest rate higher than that allowed by their home state.2 All other usury claims against national banks are preempted by the NBA. On May 22, 2015, the United States Court of Appeals for the Second Circuit held in Madden that a non-national bank assignee of debt originated by a national bank could not rely on the NBA for preemption of state usury laws.

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