Magazine article Independent Banker

Supreme Court Declines Preemption Case

Magazine article Independent Banker

Supreme Court Declines Preemption Case

Article excerpt

The U.S. Supreme Court declined to take a case on regulatory preemption, effectively maintaining a lower court decision that state usury laws apply to debt purchased from a national bank. The decision is a setback in the financial services industry's push for clarity in the Madden v. Midland Funding case.

In the case, the U.S. Court of Appeals for the Second Circuit previously ruled that National Bank Act protections for Bank of America do not transfer to Midland Funding, which is seeking to collect on charged-offcredit-card debt it purchased from BofA. A previous lower court decision held that the act preempts the application of state usury laws to national bank loans once sold or assigned.

The Supreme Court's decision follows an Obama administration brief arguing that the appeals court ruling was "incorrect" but that it is against the high court reviewing the case. …

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