MONTH-IN-BRIEF (Aug 2020)
States Sue FDIC Over Final "Valid When Made" Rule
By Catherine M. Brennan, Hudson Cook, LLP
The states of New York, California, Illinois, Massachusetts, Minnesota, New Jersey, and North Carolina and the District of Columbia have sued the Federal Deposit Insurance Corporation over its "valid when made" rule, one day before it is scheduled to take effect. The states allege that the FDIC rule extends the ability of state-chartered banks to export interest rates and interest fees allowed by their home states to non-bank debt buyers, such as payday lenders or any other entity that purchases debt from a state-chartered bank. The lawsuit is similar to one filed last month by California, Illinois, and New York challenging a similar rule promulgated by the Office of the Comptroller of the Currency, the regulator of national banks.