In the wake of rulings upholding federal regulators’ “valid when made” rules, a new lawsuit serves as a reminder that state regulators and class-action plaintiffs’ lawyers may continue to challenge the bank partnership lending model under the “true lender” doctrine.

Continue Reading Fintech Lawsuit Highlights True Lender Risk for Bank Partnership Lending Model

Class-action litigation involving overdraft and nonsufficient funds charges is nothing new to many financial institutions.  But in recent years, plaintiffs’ lawyers have shifted tactics and changed the types of practices they are targeting.  Financial regulators have also signaled their intention to place increased focus on these charges.  Financial institutions should therefore re-examine their account agreements and overdraft disclosure materials to ensure they minimize risk and exposure.

Continue Reading A Closer Look: Overdraft Fees Continue to Invite New Legal Challenges and Regulatory Scrutiny

Delivering a significant win for the financial services industry, a California federal judge upheld “valid when made” rules promulgated by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) in California v. OCC, No. 4:20-cv-05200 (N.D. Cal. Feb. 8, 2022) and California v. FDIC, No. 4:20-cv-05860 (N.D. Cal. Feb. 8, 2022).  Those rules sought to undo the Second Circuit’s 2015 decision in Madden v. Midland Funding—a decision that class-action plaintiffs’ lawyers and state regulators have invoked to bring lawsuits challenging so-called “rent-a-bank” schemes between banks and third parties.  The rules were finalized in June and July 2020, and established a bright-line rule that the interest rate charged on a bank-made loan may still be charged after the loan is sold to a third party.

Continue Reading A Closer Look: Federal Court Upholds OCC’s & FDIC’s Valid-When-Made Rules