CFA is asking the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency to encourage the Solicitor General to recommend that the U.S. Supreme Court deny the petition for a writ of certiorari in Midland Funding LLC v. Madden. In this case, the debt buyer, which had purchased charged-off debt from a national bank, subsequently charged additional interest above that permitted by state usury laws. The court held that, although the credit had been originated by a national bank that was not subject to New York’s usury law, an unaffiliated debt-buyer of that debt, after the bank had charged it off, could not avoid the state limit on interest rates. To reach this holding, the court considered whether applying state law to a non-bank buyer of defaulted debt would significantly interfere with a national bank’s exercise of its powers. The court found that limiting the debt buyer to state limits on interest rates would not interfere with the business of national banks and, therefore, that the National Bank Act did not preempt the state law. Based on our experience in this area, we believe that the Second Circuit applied a settled and correct rule of law—one that appropriately balances protection for consumers and deference to the legitimate interests of national banks.
