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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Tuesday, November 1, 2016

  • schedule Time

    1:00 PM E.T.

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.


  • Live Online


    On Demand

$347.00

This course is $0 with these passes:

CLE
ALL

This CLE course will provide strategies for counsel to banks, marketplace lenders, loan buyers, securitizers and other secondary market participants on originating loans, structuring loan sales and defending interest rate and other claims to avoid the impact of the Madden decision, which limits interest rates charged by purchasers of loans in the secondary market.

Faculty

Lisa M. Ledbetter
Partner
Jones Day

Ms. Ledbetter advises U.S. and non-U.S. banks and financial institutions on strategic, regulatory, enforcement, and compliance matters before federal and state agencies, including the Federal Reserve Board of Governors, Office of the Comptroller of the Currency, FDIC, and the CFPB, among others. She advises clients on developing new financial products and services, implementing regulatory requirements, and business integration, expansion and wind-down.

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Ralph F. Macdonald
Of Counsel
Jones Day

Mr. MacDonald is a financial services lawyer who focuses on M&As, public and private securities, governance, and policy issues for clients engaged in this industry. Since 1979, he has helped domestic and international clients including bank holding companies, banks, investment banks, broker-dealers, investment managers, and fintech companies. He advises senior management and boards of directors. Mr. MacDonald also provides strategic and transaction guidance, including evolving areas such as regulatory relief and financial services policy. A growing area is the fintech industry, particularly its regulation and relationships with state, federal, and foreign regulators and traditional financial services companies. Clients range from global banks such as Citibank and BNP to regional and community banks. He often advises commercial businesses with respect to relationships and services with their financial services providers. Mr. MacDonald advises clients frequently regarding financial services M&As, asset and liability transactions, public and private securities offerings, Volcker Rule, investments and risk management, and bank, trust company, credit card, fintech, and other financial services charters.

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Description

The U.S. Supreme Court denied cert in the Second Circuit’s Madden v. Midland Funding decision, letting stand a ruling that an assignee of consumer loans originated by a national bank cannot invoke federal preemption to defend against a state law usury claim. The decision bypasses the long-standing “valid when made” principle that lenders and secondary loan market participants have relied on to charge interest rates as high as those permitted by the originating bank’s jurisdiction.

As a result of Madden, national banks and marketplace lenders need to consider how to export interest rates when they sell loans originated in the Second Circuit. The fallout from the decision is expected to reach beyond the Circuit to national banks across the country and leaves a great deal of uncertainty for all players involved in secondary loan market transactions. The decision has already prompted class action lawsuits by both marketplace lending shareholders and borrowers.

Counsel representing banks as well as secondary market participants must become well versed in tactics to weather the impact of this decision on pre-Madden debt and provide financial clients with tools to mitigate negative effects on future loan transactions and secondary market sales.

Listen as our authoritative panel provides strategies for originating loans and structuring loan sales to circumvent the effect of Madden as well as valid defenses that can be asserted by marketplace lenders and secondary market loan purchasers to defeat claims by consumers and investors attempting to rely upon Madden.

Outline

  1. Madden v. Midland usury restrictions
  2. Valid when made doctrine
  3. True lender and rent a charter challenges
  4. Other litigation prompted by Madden
  5. Future of the secondary market post-Madden and effects on secondary and securitization participants
  6. Strategies to avoid the effects of Madden

Benefits

The panel will review these and other key issues:

  • How can loan originations, sales and securitizations be structured to mitigate Madden’s effects?
  • What provisions should be included in originating loan documents to reduce Madden concerns?
  • How can secondary market participants avoid “true lender” challenges?
  • What effect does Madden have on loans originated outside the Second Circuit?
  • What strategies can be used by assignees attempting to enforce pre-Madden debt?
  • Should secondary market participants seek to renegotiate terms with loan originators to maintain interest rates in loans sold?