News Release 2020-72 | May 29, 2020

Acting Comptroller of the Currency Statement Regarding the ‘Madden’ Rule

WASHINGTON, D.C.—Acting Comptroller of the Currency Brian P. Brooks today released the following statement regarding the Office of the Comptroller of the Currency’s (OCC) final rule to clarify 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.

One of President Lincoln’s goals in creating a system of national banks 157 years ago was to enable interstate commerce by ensuring the efficient and consistent exchange of value. The decision the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC., undermined that legacy by creating legal uncertainty regarding the centuries old doctrine of valid when made.

Today, as one of my first acts as Acting Comptroller of the Currency, I signed a final rule to protect Lincoln’s vision and to clarify that a bank may transfer a loan without affecting the legally permissible interest term. The rule supports the orderly function of markets and promotes the availability of credit by answering the legal uncertainty created by the “Madden” decision. Such certainty allows secondary markets to work efficiently and to serve their essential role in the business of banking and helping banks access liquidity and alternative funding, improve financial performance ratios, and meet customer needs.

Related Link

  • OCC NR 2020-71, “OCC Issues Rule to Clarify Permissible Interest on Transferred Loans”

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