This is a charge letter sent by the Maryland Commissioner of Financial Regulation to Fortiva Finanical, Bank of Missouri, and Atlanticus warning them of an administrative hearing concerning unlicensed lending activity involving instalment loans. Even if Bank of Missouri was the true lender, and could avoid the licensure requirement, Fortiva and Atlanticus under Maryland law were required to obtain a license to assist consumers in obtaining a loan extension and to collect on such loans.
Federal Preemption and Credit Regulation
This is a summary judgment motion in California’s challenge in the Northern District of California to an OCC rule. The OCC rule allows non-bank assignees of national banks to charge the same interest rate that a national bank could charge even where state law would otherwise prohibit such a charge by a non-bank.
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The Federal Deposit Insurance Corporation (FDIC) is issuing regulations clarifying the law that governs the interest rates State-chartered banks and insured branches of foreign banks (collectively, State banks) may charge. These regulations provide that State banks are authorized to charge interest at the rate permitted by the State in which the State bank is located, or one percent in excess of the 90-day commercial paper rate, whichever is greater.
Federal law establishes that national banks and savings associations (banks) may charge interest on loans at the maximum rate permitted to any state-chartered or licensed lending institution in the state where the bank is located. In addition, banks are generally authorized to sell, assign, or otherwise transfer (transfer) loans and to enter into and assign loan contracts. Despite these authorities, recent developments have created legal uncertainty about the ongoing permissibility of the interest term after a bank transfers a loan.
Outdated – See OCC 2020-11
For more recent information, refer to Comptroller’s Handbook,
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