2024

[Farfromgeneva]

Worth noting that the #2 GOP senator is expected to endorse Tim Scott:


https://www.msn.com/en-us/news/politics ... r-AA1bub0D

I'm sure I've heard his name at some point. But does the public know or care who John Thune is?

We're still at the stage of "if Trump is the nominee, I'll support him no matter what."

Maybe folks should?

https://www.paymentsjournal.com/south-d ... banks/amp/

South Dakota: Credit Card Haven or the Cayman Islands for Banks?

A fun read in today’s Washington Post about moving Citi to the thriving metropolis of Sioux Falls.

Brian Riley2 years Ago
For months in the early 1980s, I traveled from LaGuardia Airport in N.Y. to Minneapolis on either United or USAir, then from Minneapolis to Joe Foss Field in good old Sioux Falls. The downside of the plane change in MSP was that you’d have to get on a Beechcraft propeller plane flown by Mesaba Airlines.

Everyone loves a nice business trip to L.A. or SFO, but Sioux Falls was pretty radical at the time. And, yes, there are “falls” in Sioux Falls. The best hotel in town was the Holiday Inn in the center city, if you can call it that. If you were from New York and commuting to Sioux Falls, you’d know Minerva’s as the best restaurant in town. The Citi-joke was that the restaurant was so good, at least good enough to survive on 51st and Lexington Avenue, that the owner must have gotten to FSD through the witness protection program. However, workers did not realize the crunch of an N.Y. bagel.

Maybe too much background here, but if you wanted to motivate technical people transferred from NYC, you’d know that you’d better bring authentic N.Y. bagels if you tried to negotiate your requirements for the programming rock.

Back to the Washington Post:

Last week, Washington Post reporters exposed how global elites have used opaque trusts to shield wealth from tax authorities and the critical public. The story’s surprising detail was not the overt tax avoidance — activity we have come to expect. Rather, it was the setting: Sioux Falls, S.D.

When did the Mount Rushmore State, better known for bike rallies than banking, become an “offshore” haven for laundering ill-gotten fortunes? And why do U.S. authorities tolerate it?

The answer to the first question begins with a surprise meeting between executives from New York-based Citibank and South Dakota Gov. William Janklow (R) in February 1980. The bankers were there to talk about credit cards. Janklow was all ears.

Here’s the background:

Following the 1929 depression, a series of banking regulations curtailed interstate banking. First, the McFadden Act established the right to govern banks within their state. Then, in 1956, the Douglas Act forbid acquisitions of an interstate bank.

In the nascent days of credit cards, it was difficult for banks to operate lending products outside of their state. Interest rates were set at the state level, creating a challenge for calculations. In addition, if you operated from N.Y., you were bound by the state usury laws. In NY, at the time, the Washington Post recalls:

Because Citibank was based in New York, state laws regulated all Citibank credit card accounts.

And New York capped the interest rate that banks could charge at 18 percent (and only 12 percent on balances above $500) — no matter where the cardholder happened to live.

But true to Citi-style, ambitions for a credit card business were much broader:

Instead, Citibank executives envisioned a nationwide consumer bank delivered through cards rather than traditional branches. Unfortunately, the move, while ambitious, was poorly timed.

When Citibank initiated its nationwide campaign, it could live with these rates. In October 1979, however, the world changed. Then-Federal Reserve Chairman Paul Volcker launched an aggressive monetary experiment to wring inflation out of the economy.

Market interest rates skyrocketed. So did Citibank’s cost of funds. Yet, the price the bank could charge its credit card customers remained fixed. So every time a cardholder used their card, the bank lost money.

And said Walter Wriston, the legendary CEO:

“If you are lending money at 12 percent and paying 20 percent,” Citibank chief executive Walter B. Wriston lamented, “you don’t have to be Einstein to realize you’re out of business.” Wriston appealed to New York politicians for help. The legislature refused to budge.

The bank was in a fix. It could only escape the rate cap by leaving New York for a less restrictive state. And it could only do that if that state’s legislature invited Citi in. And so, in February 1980, Citibank lawyers knocked on Janklow’s door. South Dakota was one of the few states without an interest rate cap. Moreover, the state’s legislature was in session. They could act fast.

What made this all possible was the Marquette Decision, a Supreme Court Case that permitted rate exportability. The usury rate prevailed based on the state of the card issuance. N.Y. had a cap; South Dakota quickly lifted the interest rate cap.

Citibank offered just what the state needed, new industry, good jobs, and tax revenue. In March 1980, South Dakota’s legislature passed the “Citibank bill” inviting the company to open a subsidiary in the state with nearly unanimous approval — allowing it to shift its card-issuing business to the Mount Rushmore State.

Once in South Dakota, Citibank’s first move was to raise its interest rates. Citi cardholder rates rose from between 12 percent and 18 percent, depending on the consumer’s balance, to 19.8 percent for all balances, plus a $20 annual fee.

This move reshaped the banking and credit card industry. Citibank and South Dakota undermined the ability of every other state to regulate credit card interest rates. As a result, banks could now either move to South Dakota or threaten to, forcing most states to raise or eliminate interest rate ceilings, ending a critical consumer protection against excessive interest and long-term debt.

Both Citibank, NA and Wells Fargo Bank, NA, find their home base in Sioux Falls. As a result, the firms offer a more robust career path than the other large employer, Morell’s Beef Packing.

One thing they rarely mention about Sioux Falls. In the winter, with the wind chill, the air temperature can be 80 degrees below zero. That’s why employee parking lots have engine block heater connections. But, in the land of no-corporate income tax, that’s just a detail.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

[PizzaSnake]

Worth noting that the #2 GOP senator is expected to endorse Tim Scott:


https://www.msn.com/en-us/news/politics ... r-AA1bub0D

I'm sure I've heard his name at some point. But does the public know or care who John Thune is?

We're still at the stage of "if Trump is the nominee, I'll support him no matter what."

Maybe folks should?

https://www.paymentsjournal.com/south-d ... banks/amp/

South Dakota: Credit Card Haven or the Cayman Islands for Banks?

A fun read in today’s Washington Post about moving Citi to the thriving metropolis of Sioux Falls.

Brian Riley2 years Ago
For months in the early 1980s, I traveled from LaGuardia Airport in N.Y. to Minneapolis on either United or USAir, then from Minneapolis to Joe Foss Field in good old Sioux Falls. The downside of the plane change in MSP was that you’d have to get on a Beechcraft propeller plane flown by Mesaba Airlines.

Everyone loves a nice business trip to L.A. or SFO, but Sioux Falls was pretty radical at the time. And, yes, there are “falls” in Sioux Falls. The best hotel in town was the Holiday Inn in the center city, if you can call it that. If you were from New York and commuting to Sioux Falls, you’d know Minerva’s as the best restaurant in town. The Citi-joke was that the restaurant was so good, at least good enough to survive on 51st and Lexington Avenue, that the owner must have gotten to FSD through the witness protection program. However, workers did not realize the crunch of an N.Y. bagel.

Maybe too much background here, but if you wanted to motivate technical people transferred from NYC, you’d know that you’d better bring authentic N.Y. bagels if you tried to negotiate your requirements for the programming rock.

Back to the Washington Post:

Last week, Washington Post reporters exposed how global elites have used opaque trusts to shield wealth from tax authorities and the critical public. The story’s surprising detail was not the overt tax avoidance — activity we have come to expect. Rather, it was the setting: Sioux Falls, S.D.

When did the Mount Rushmore State, better known for bike rallies than banking, become an “offshore” haven for laundering ill-gotten fortunes? And why do U.S. authorities tolerate it?

The answer to the first question begins with a surprise meeting between executives from New York-based Citibank and South Dakota Gov. William Janklow (R) in February 1980. The bankers were there to talk about credit cards. Janklow was all ears.

Here’s the background:

Following the 1929 depression, a series of banking regulations curtailed interstate banking. First, the McFadden Act established the right to govern banks within their state. Then, in 1956, the Douglas Act forbid acquisitions of an interstate bank.

In the nascent days of credit cards, it was difficult for banks to operate lending products outside of their state. Interest rates were set at the state level, creating a challenge for calculations. In addition, if you operated from N.Y., you were bound by the state usury laws. In NY, at the time, the Washington Post recalls:

Because Citibank was based in New York, state laws regulated all Citibank credit card accounts.

And New York capped the interest rate that banks could charge at 18 percent (and only 12 percent on balances above $500) — no matter where the cardholder happened to live.

But true to Citi-style, ambitions for a credit card business were much broader:

Instead, Citibank executives envisioned a nationwide consumer bank delivered through cards rather than traditional branches. Unfortunately, the move, while ambitious, was poorly timed.

When Citibank initiated its nationwide campaign, it could live with these rates. In October 1979, however, the world changed. Then-Federal Reserve Chairman Paul Volcker launched an aggressive monetary experiment to wring inflation out of the economy.

Market interest rates skyrocketed. So did Citibank’s cost of funds. Yet, the price the bank could charge its credit card customers remained fixed. So every time a cardholder used their card, the bank lost money.

And said Walter Wriston, the legendary CEO:

“If you are lending money at 12 percent and paying 20 percent,” Citibank chief executive Walter B. Wriston lamented, “you don’t have to be Einstein to realize you’re out of business.” Wriston appealed to New York politicians for help. The legislature refused to budge.

The bank was in a fix. It could only escape the rate cap by leaving New York for a less restrictive state. And it could only do that if that state’s legislature invited Citi in. And so, in February 1980, Citibank lawyers knocked on Janklow’s door. South Dakota was one of the few states without an interest rate cap. Moreover, the state’s legislature was in session. They could act fast.

What made this all possible was the Marquette Decision, a Supreme Court Case that permitted rate exportability. The usury rate prevailed based on the state of the card issuance. N.Y. had a cap; South Dakota quickly lifted the interest rate cap.

Citibank offered just what the state needed, new industry, good jobs, and tax revenue. In March 1980, South Dakota’s legislature passed the “Citibank bill” inviting the company to open a subsidiary in the state with nearly unanimous approval — allowing it to shift its card-issuing business to the Mount Rushmore State.

Once in South Dakota, Citibank’s first move was to raise its interest rates. Citi cardholder rates rose from between 12 percent and 18 percent, depending on the consumer’s balance, to 19.8 percent for all balances, plus a $20 annual fee.

This move reshaped the banking and credit card industry. Citibank and South Dakota undermined the ability of every other state to regulate credit card interest rates. As a result, banks could now either move to South Dakota or threaten to, forcing most states to raise or eliminate interest rate ceilings, ending a critical consumer protection against excessive interest and long-term debt.

Both Citibank, NA and Wells Fargo Bank, NA, find their home base in Sioux Falls. As a result, the firms offer a more robust career path than the other large employer, Morell’s Beef Packing.

One thing they rarely mention about Sioux Falls. In the winter, with the wind chill, the air temperature can be 80 degrees below zero. That’s why employee parking lots have engine block heater connections. But, in the land of no-corporate income tax, that’s just a detail.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Ah, South Dakota, the usury state:

“ To protect consumers, many states have adopted usury laws capping the interest rates that lenders can charge borrowers. There is significant variation among state interest-rate limits: some states have adopted strict usury laws, some have enacted more permissive rules, and others have eliminated usury laws altogether. But federal preemption of state law has diminished the relevance of these differences when it comes to bank lending. Section 85 of the National Bank Act (NBA) allows federally chartered banks to “export” the maximum interest rates of their “home” states, meaning they can charge those rates when lending to borrowers in other states with stricter usury laws. Accordingly, a national bank headquartered in South Dakota—which has no interest-rate limits—need not abide by New York usury law when it lends to New York borrowers. Predictably, this regime has made more permissive states attractive destinations for banks’ credit-card operations.And these shifts have reduced the sway of states that favor stricter limits on high-cost lending.”

https://crsreports.congress.gov/product ... B/LSB10512

[Farfromgeneva]

Worth noting that the #2 GOP senator is expected to endorse Tim Scott:


https://www.msn.com/en-us/news/politics ... r-AA1bub0D

I'm sure I've heard his name at some point. But does the public know or care who John Thune is?

We're still at the stage of "if Trump is the nominee, I'll support him no matter what."

Maybe folks should?

https://www.paymentsjournal.com/south-d ... banks/amp/

South Dakota: Credit Card Haven or the Cayman Islands for Banks?

A fun read in today’s Washington Post about moving Citi to the thriving metropolis of Sioux Falls.

Brian Riley2 years Ago
For months in the early 1980s, I traveled from LaGuardia Airport in N.Y. to Minneapolis on either United or USAir, then from Minneapolis to Joe Foss Field in good old Sioux Falls. The downside of the plane change in MSP was that you’d have to get on a Beechcraft propeller plane flown by Mesaba Airlines.

Everyone loves a nice business trip to L.A. or SFO, but Sioux Falls was pretty radical at the time. And, yes, there are “falls” in Sioux Falls. The best hotel in town was the Holiday Inn in the center city, if you can call it that. If you were from New York and commuting to Sioux Falls, you’d know Minerva’s as the best restaurant in town. The Citi-joke was that the restaurant was so good, at least good enough to survive on 51st and Lexington Avenue, that the owner must have gotten to FSD through the witness protection program. However, workers did not realize the crunch of an N.Y. bagel.

Maybe too much background here, but if you wanted to motivate technical people transferred from NYC, you’d know that you’d better bring authentic N.Y. bagels if you tried to negotiate your requirements for the programming rock.

Back to the Washington Post:

Last week, Washington Post reporters exposed how global elites have used opaque trusts to shield wealth from tax authorities and the critical public. The story’s surprising detail was not the overt tax avoidance — activity we have come to expect. Rather, it was the setting: Sioux Falls, S.D.

When did the Mount Rushmore State, better known for bike rallies than banking, become an “offshore” haven for laundering ill-gotten fortunes? And why do U.S. authorities tolerate it?

The answer to the first question begins with a surprise meeting between executives from New York-based Citibank and South Dakota Gov. William Janklow (R) in February 1980. The bankers were there to talk about credit cards. Janklow was all ears.

Here’s the background:

Following the 1929 depression, a series of banking regulations curtailed interstate banking. First, the McFadden Act established the right to govern banks within their state. Then, in 1956, the Douglas Act forbid acquisitions of an interstate bank.

In the nascent days of credit cards, it was difficult for banks to operate lending products outside of their state. Interest rates were set at the state level, creating a challenge for calculations. In addition, if you operated from N.Y., you were bound by the state usury laws. In NY, at the time, the Washington Post recalls:

Because Citibank was based in New York, state laws regulated all Citibank credit card accounts.

And New York capped the interest rate that banks could charge at 18 percent (and only 12 percent on balances above $500) — no matter where the cardholder happened to live.

But true to Citi-style, ambitions for a credit card business were much broader:

Instead, Citibank executives envisioned a nationwide consumer bank delivered through cards rather than traditional branches. Unfortunately, the move, while ambitious, was poorly timed.

When Citibank initiated its nationwide campaign, it could live with these rates. In October 1979, however, the world changed. Then-Federal Reserve Chairman Paul Volcker launched an aggressive monetary experiment to wring inflation out of the economy.

Market interest rates skyrocketed. So did Citibank’s cost of funds. Yet, the price the bank could charge its credit card customers remained fixed. So every time a cardholder used their card, the bank lost money.

And said Walter Wriston, the legendary CEO:

“If you are lending money at 12 percent and paying 20 percent,” Citibank chief executive Walter B. Wriston lamented, “you don’t have to be Einstein to realize you’re out of business.” Wriston appealed to New York politicians for help. The legislature refused to budge.

The bank was in a fix. It could only escape the rate cap by leaving New York for a less restrictive state. And it could only do that if that state’s legislature invited Citi in. And so, in February 1980, Citibank lawyers knocked on Janklow’s door. South Dakota was one of the few states without an interest rate cap. Moreover, the state’s legislature was in session. They could act fast.

What made this all possible was the Marquette Decision, a Supreme Court Case that permitted rate exportability. The usury rate prevailed based on the state of the card issuance. N.Y. had a cap; South Dakota quickly lifted the interest rate cap.

Citibank offered just what the state needed, new industry, good jobs, and tax revenue. In March 1980, South Dakota’s legislature passed the “Citibank bill” inviting the company to open a subsidiary in the state with nearly unanimous approval — allowing it to shift its card-issuing business to the Mount Rushmore State.

Once in South Dakota, Citibank’s first move was to raise its interest rates. Citi cardholder rates rose from between 12 percent and 18 percent, depending on the consumer’s balance, to 19.8 percent for all balances, plus a $20 annual fee.

This move reshaped the banking and credit card industry. Citibank and South Dakota undermined the ability of every other state to regulate credit card interest rates. As a result, banks could now either move to South Dakota or threaten to, forcing most states to raise or eliminate interest rate ceilings, ending a critical consumer protection against excessive interest and long-term debt.

Both Citibank, NA and Wells Fargo Bank, NA, find their home base in Sioux Falls. As a result, the firms offer a more robust career path than the other large employer, Morell’s Beef Packing.

One thing they rarely mention about Sioux Falls. In the winter, with the wind chill, the air temperature can be 80 degrees below zero. That’s why employee parking lots have engine block heater connections. But, in the land of no-corporate income tax, that’s just a detail.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Ah, South Dakota, the usury state:

“ To protect consumers, many states have adopted usury laws capping the interest rates that lenders can charge borrowers. There is significant variation among state interest-rate limits: some states have adopted strict usury laws, some have enacted more permissive rules, and others have eliminated usury laws altogether. But federal preemption of state law has diminished the relevance of these differences when it comes to bank lending. Section 85 of the National Bank Act (NBA) allows federally chartered banks to “export” the maximum interest rates of their “home” states, meaning they can charge those rates when lending to borrowers in other states with stricter usury laws. Accordingly, a national bank headquartered in South Dakota—which has no interest-rate limits—need not abide by New York usury law when it lends to New York borrowers. Predictably, this regime has made more permissive states attractive destinations for banks’ credit-card operations.And these shifts have reduced the sway of states that favor stricter limits on high-cost lending.”

https://crsreports.congress.gov/product ... B/LSB10512

Yes there was a court ruling around a decade ago in a case called Madden v Midland (loan serving coming owned by PNC) that is shortened to “valid when made” which means you export the rules of the originating state. Had this conversation today with a private student lender which needs a second sponsor bank to run originations through and have a PE backed community bank board teed up and one of the first questions from the CEO asked was about various lending laws in the state. Obviously it’s an easy one and popular like GA, TX and FL opposed with the worst from their perspective being Southern district of NY and Alaska.

The valid-when-made doctrine is held to have originated with Nichols v. Fearson, an 1833 case, which found that "a contract, which, in its inception, is unaffected by usury can never be invalidated by any subsequent usurious transaction."[2] The doctrine became a part of common law after the National Bank Act was passed in 1864.[3] The act maintained, among other things, that national banks could only be held to the usury laws in their charter state, rather than the home state of a borrower.[4] Because of ambiguities in the language of the act, the courts generally treated the transfer of loans like the transfer of any other contract, allowing interest rates to remain fixed on loans that were sold or transferred. Under this model, protection from out-of-state usury laws was transferred with the loan.[5][6]

The valid-when-made doctrine was partly upheld in the landmark 1978 case Marquette National Bank of Minneapolis v. First of Omaha Service Corp.[7] In Marquette v. Omaha, the Supreme Court ruled that a nationally chartered bank could offer loans with the maximum interest rate allowed in its charter state to consumers in any other state, without being subject to another state's usury laws.[6] This ruling led many large national banks to move to states with high-interest rates.[6] After the ruling, courts generally held that debt buyers could collect interest at the rate originally set, despite not being subject to the same protections as national banks.[8] This dynamic became a major component of the "rate exportation model" of lending, under which national banks sold or transferred loans.[9]

Madden v. Midland Funding, LLC (2015–2019)
Edit
The case of Madden v. Midland Funding LLC in 2015 challenged the basic premise of valid when made doctrine. Regarding Madden, the U.S. Court of Appeals for the Second Circuit ruled that Midland Funding, LLC, a third-party debt buyer, could be subject to state usury laws after purchasing a loan from Bank of America, a protected national bank.[10] The Solicitor General of the United States submitted a brief that argued that the court's finding had been in error and was neither in keeping with the valid-when-made doctrine nor with the position of other circuit courts. However, Midland was denied certiorari by the Supreme Court in 2016.[11][12]

The Madden ruling immediately caused widespread uncertainty about the ability of banks to sell or transfer loans to third parties.[5] In particular, it was criticized for making it more difficult for high-risk, disadvantaged borrowers to obtain personal or business loans.[13][14] The ruling also prompted concerns that loans that had previously been legally valid might become usurious, opening up secondary lenders to civil and criminal charges.[13]

At the time of the decision, many legal and financial experts predicted that Madden would be limited in scope by subsequent rulings,[15] including the American Bankers Association who urged the creation of a "Madden fix" law to protect valid when made.[16] Multiple bills were proposed to implement a "Madden fix" law, including the Protecting Consumers’ Access to Credit Act 2017, which was passed by the U.S. House Of Representatives.[8] Opponents of the "Madden fix" laws argued that the valid when-made doctrine violated states' rights.[17]

OCC and FDIC decisions (2019–present)
Edit
In 2019, the Office of the Comptroller of the Currency (OCC) announced its intentions to reinforce valid when made. The OCC clarified that the interest rate of loans can remain intact after being sold to a secondary lender.[1] The Federal Deposit Insurance Corporation (FDIC) also reaffirmed and codified valid when made doctrine, arguing that Madden was a "deviation from longstanding notions of contract law" and had created market instability.[18]

On May 29, 2020, the OCC issued a final rule that was codified and valid when made. The rule was intended to address the legal ramifications of Madden and mitigate the damage to the secondary loan market. It stated that a loan that was not subject to a state usury law at the time of creation cannot subsequently become subject to it after being sold, transferred, or assigned in any way.[19]

The states of California, Illinois, and New York challenged the issuance of the rule, contending that the OCC had not considered the consequences of its ruling. This challenge was rejected by the U.S. District Court for the Northern District of California, which ruled in favor of the OCC on February 8, 2022.[20][19]

[PizzaSnake]

Worth noting that the #2 GOP senator is expected to endorse Tim Scott:


https://www.msn.com/en-us/news/politics ... r-AA1bub0D

I'm sure I've heard his name at some point. But does the public know or care who John Thune is?

We're still at the stage of "if Trump is the nominee, I'll support him no matter what."

Maybe folks should?

https://www.paymentsjournal.com/south-d ... banks/amp/

South Dakota: Credit Card Haven or the Cayman Islands for Banks?

A fun read in today’s Washington Post about moving Citi to the thriving metropolis of Sioux Falls.

Brian Riley2 years Ago
For months in the early 1980s, I traveled from LaGuardia Airport in N.Y. to Minneapolis on either United or USAir, then from Minneapolis to Joe Foss Field in good old Sioux Falls. The downside of the plane change in MSP was that you’d have to get on a Beechcraft propeller plane flown by Mesaba Airlines.

Everyone loves a nice business trip to L.A. or SFO, but Sioux Falls was pretty radical at the time. And, yes, there are “falls” in Sioux Falls. The best hotel in town was the Holiday Inn in the center city, if you can call it that. If you were from New York and commuting to Sioux Falls, you’d know Minerva’s as the best restaurant in town. The Citi-joke was that the restaurant was so good, at least good enough to survive on 51st and Lexington Avenue, that the owner must have gotten to FSD through the witness protection program. However, workers did not realize the crunch of an N.Y. bagel.

Maybe too much background here, but if you wanted to motivate technical people transferred from NYC, you’d know that you’d better bring authentic N.Y. bagels if you tried to negotiate your requirements for the programming rock.

Back to the Washington Post:

Last week, Washington Post reporters exposed how global elites have used opaque trusts to shield wealth from tax authorities and the critical public. The story’s surprising detail was not the overt tax avoidance — activity we have come to expect. Rather, it was the setting: Sioux Falls, S.D.

When did the Mount Rushmore State, better known for bike rallies than banking, become an “offshore” haven for laundering ill-gotten fortunes? And why do U.S. authorities tolerate it?

The answer to the first question begins with a surprise meeting between executives from New York-based Citibank and South Dakota Gov. William Janklow (R) in February 1980. The bankers were there to talk about credit cards. Janklow was all ears.

Here’s the background:

Following the 1929 depression, a series of banking regulations curtailed interstate banking. First, the McFadden Act established the right to govern banks within their state. Then, in 1956, the Douglas Act forbid acquisitions of an interstate bank.

In the nascent days of credit cards, it was difficult for banks to operate lending products outside of their state. Interest rates were set at the state level, creating a challenge for calculations. In addition, if you operated from N.Y., you were bound by the state usury laws. In NY, at the time, the Washington Post recalls:

Because Citibank was based in New York, state laws regulated all Citibank credit card accounts.

And New York capped the interest rate that banks could charge at 18 percent (and only 12 percent on balances above $500) — no matter where the cardholder happened to live.

But true to Citi-style, ambitions for a credit card business were much broader:

Instead, Citibank executives envisioned a nationwide consumer bank delivered through cards rather than traditional branches. Unfortunately, the move, while ambitious, was poorly timed.

When Citibank initiated its nationwide campaign, it could live with these rates. In October 1979, however, the world changed. Then-Federal Reserve Chairman Paul Volcker launched an aggressive monetary experiment to wring inflation out of the economy.

Market interest rates skyrocketed. So did Citibank’s cost of funds. Yet, the price the bank could charge its credit card customers remained fixed. So every time a cardholder used their card, the bank lost money.

And said Walter Wriston, the legendary CEO:

“If you are lending money at 12 percent and paying 20 percent,” Citibank chief executive Walter B. Wriston lamented, “you don’t have to be Einstein to realize you’re out of business.” Wriston appealed to New York politicians for help. The legislature refused to budge.

The bank was in a fix. It could only escape the rate cap by leaving New York for a less restrictive state. And it could only do that if that state’s legislature invited Citi in. And so, in February 1980, Citibank lawyers knocked on Janklow’s door. South Dakota was one of the few states without an interest rate cap. Moreover, the state’s legislature was in session. They could act fast.

What made this all possible was the Marquette Decision, a Supreme Court Case that permitted rate exportability. The usury rate prevailed based on the state of the card issuance. N.Y. had a cap; South Dakota quickly lifted the interest rate cap.

Citibank offered just what the state needed, new industry, good jobs, and tax revenue. In March 1980, South Dakota’s legislature passed the “Citibank bill” inviting the company to open a subsidiary in the state with nearly unanimous approval — allowing it to shift its card-issuing business to the Mount Rushmore State.

Once in South Dakota, Citibank’s first move was to raise its interest rates. Citi cardholder rates rose from between 12 percent and 18 percent, depending on the consumer’s balance, to 19.8 percent for all balances, plus a $20 annual fee.

This move reshaped the banking and credit card industry. Citibank and South Dakota undermined the ability of every other state to regulate credit card interest rates. As a result, banks could now either move to South Dakota or threaten to, forcing most states to raise or eliminate interest rate ceilings, ending a critical consumer protection against excessive interest and long-term debt.

Both Citibank, NA and Wells Fargo Bank, NA, find their home base in Sioux Falls. As a result, the firms offer a more robust career path than the other large employer, Morell’s Beef Packing.

One thing they rarely mention about Sioux Falls. In the winter, with the wind chill, the air temperature can be 80 degrees below zero. That’s why employee parking lots have engine block heater connections. But, in the land of no-corporate income tax, that’s just a detail.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Ah, South Dakota, the usury state:

“ To protect consumers, many states have adopted usury laws capping the interest rates that lenders can charge borrowers. There is significant variation among state interest-rate limits: some states have adopted strict usury laws, some have enacted more permissive rules, and others have eliminated usury laws altogether. But federal preemption of state law has diminished the relevance of these differences when it comes to bank lending. Section 85 of the National Bank Act (NBA) allows federally chartered banks to “export” the maximum interest rates of their “home” states, meaning they can charge those rates when lending to borrowers in other states with stricter usury laws. Accordingly, a national bank headquartered in South Dakota—which has no interest-rate limits—need not abide by New York usury law when it lends to New York borrowers. Predictably, this regime has made more permissive states attractive destinations for banks’ credit-card operations.And these shifts have reduced the sway of states that favor stricter limits on high-cost lending.”

https://crsreports.congress.gov/product ... B/LSB10512

Yes there was a court ruling around a decade ago in a case called Madden v Midland (loan serving coming owned by PNC) that is shortened to “valid when made” which means you export the rules of the originating state. Had this conversation today with a private student lender which needs a second sponsor bank to run originations through and have a PE backed community bank board teed up and one of the first questions from the CEO asked was about various lending laws in the state. Obviously it’s an easy one and popular like GA, TX and FL opposed with the worst from their perspective being Southern district of NY and Alaska.

The valid-when-made doctrine is held to have originated with Nichols v. Fearson, an 1833 case, which found that "a contract, which, in its inception, is unaffected by usury can never be invalidated by any subsequent usurious transaction."[2] The doctrine became a part of common law after the National Bank Act was passed in 1864.[3] The act maintained, among other things, that national banks could only be held to the usury laws in their charter state, rather than the home state of a borrower.[4] Because of ambiguities in the language of the act, the courts generally treated the transfer of loans like the transfer of any other contract, allowing interest rates to remain fixed on loans that were sold or transferred. Under this model, protection from out-of-state usury laws was transferred with the loan.[5][6]

The valid-when-made doctrine was partly upheld in the landmark 1978 case Marquette National Bank of Minneapolis v. First of Omaha Service Corp.[7] In Marquette v. Omaha, the Supreme Court ruled that a nationally chartered bank could offer loans with the maximum interest rate allowed in its charter state to consumers in any other state, without being subject to another state's usury laws.[6] This ruling led many large national banks to move to states with high-interest rates.[6] After the ruling, courts generally held that debt buyers could collect interest at the rate originally set, despite not being subject to the same protections as national banks.[8] This dynamic became a major component of the "rate exportation model" of lending, under which national banks sold or transferred loans.[9]

Madden v. Midland Funding, LLC (2015–2019)
Edit
The case of Madden v. Midland Funding LLC in 2015 challenged the basic premise of valid when made doctrine. Regarding Madden, the U.S. Court of Appeals for the Second Circuit ruled that Midland Funding, LLC, a third-party debt buyer, could be subject to state usury laws after purchasing a loan from Bank of America, a protected national bank.[10] The Solicitor General of the United States submitted a brief that argued that the court's finding had been in error and was neither in keeping with the valid-when-made doctrine nor with the position of other circuit courts. However, Midland was denied certiorari by the Supreme Court in 2016.[11][12]

The Madden ruling immediately caused widespread uncertainty about the ability of banks to sell or transfer loans to third parties.[5] In particular, it was criticized for making it more difficult for high-risk, disadvantaged borrowers to obtain personal or business loans.[13][14] The ruling also prompted concerns that loans that had previously been legally valid might become usurious, opening up secondary lenders to civil and criminal charges.[13]

At the time of the decision, many legal and financial experts predicted that Madden would be limited in scope by subsequent rulings,[15] including the American Bankers Association who urged the creation of a "Madden fix" law to protect valid when made.[16] Multiple bills were proposed to implement a "Madden fix" law, including the Protecting Consumers’ Access to Credit Act 2017, which was passed by the U.S. House Of Representatives.[8] Opponents of the "Madden fix" laws argued that the valid when-made doctrine violated states' rights.[17]

OCC and FDIC decisions (2019–present)
Edit
In 2019, the Office of the Comptroller of the Currency (OCC) announced its intentions to reinforce valid when made. The OCC clarified that the interest rate of loans can remain intact after being sold to a secondary lender.[1] The Federal Deposit Insurance Corporation (FDIC) also reaffirmed and codified valid when made doctrine, arguing that Madden was a "deviation from longstanding notions of contract law" and had created market instability.[18]

On May 29, 2020, the OCC issued a final rule that was codified and valid when made. The rule was intended to address the legal ramifications of Madden and mitigate the damage to the secondary loan market. It stated that a loan that was not subject to a state usury law at the time of creation cannot subsequently become subject to it after being sold, transferred, or assigned in any way.[19]

The states of California, Illinois, and New York challenged the issuance of the rule, contending that the OCC had not considered the consequences of its ruling. This challenge was rejected by the U.S. District Court for the Northern District of California, which ruled in favor of the OCC on February 8, 2022.[20][19]

Think “valid-when-made” will apply in the wreckage of the global economy post a default, or will force majeur abound?

[Farfromgeneva]

Worth noting that the #2 GOP senator is expected to endorse Tim Scott:


https://www.msn.com/en-us/news/politics ... r-AA1bub0D

I'm sure I've heard his name at some point. But does the public know or care who John Thune is?

We're still at the stage of "if Trump is the nominee, I'll support him no matter what."

Maybe folks should?

https://www.paymentsjournal.com/south-d ... banks/amp/

South Dakota: Credit Card Haven or the Cayman Islands for Banks?

A fun read in today’s Washington Post about moving Citi to the thriving metropolis of Sioux Falls.

Brian Riley2 years Ago
For months in the early 1980s, I traveled from LaGuardia Airport in N.Y. to Minneapolis on either United or USAir, then from Minneapolis to Joe Foss Field in good old Sioux Falls. The downside of the plane change in MSP was that you’d have to get on a Beechcraft propeller plane flown by Mesaba Airlines.

Everyone loves a nice business trip to L.A. or SFO, but Sioux Falls was pretty radical at the time. And, yes, there are “falls” in Sioux Falls. The best hotel in town was the Holiday Inn in the center city, if you can call it that. If you were from New York and commuting to Sioux Falls, you’d know Minerva’s as the best restaurant in town. The Citi-joke was that the restaurant was so good, at least good enough to survive on 51st and Lexington Avenue, that the owner must have gotten to FSD through the witness protection program. However, workers did not realize the crunch of an N.Y. bagel.

Maybe too much background here, but if you wanted to motivate technical people transferred from NYC, you’d know that you’d better bring authentic N.Y. bagels if you tried to negotiate your requirements for the programming rock.

Back to the Washington Post:

Last week, Washington Post reporters exposed how global elites have used opaque trusts to shield wealth from tax authorities and the critical public. The story’s surprising detail was not the overt tax avoidance — activity we have come to expect. Rather, it was the setting: Sioux Falls, S.D.

When did the Mount Rushmore State, better known for bike rallies than banking, become an “offshore” haven for laundering ill-gotten fortunes? And why do U.S. authorities tolerate it?

The answer to the first question begins with a surprise meeting between executives from New York-based Citibank and South Dakota Gov. William Janklow (R) in February 1980. The bankers were there to talk about credit cards. Janklow was all ears.

Here’s the background:

Following the 1929 depression, a series of banking regulations curtailed interstate banking. First, the McFadden Act established the right to govern banks within their state. Then, in 1956, the Douglas Act forbid acquisitions of an interstate bank.

In the nascent days of credit cards, it was difficult for banks to operate lending products outside of their state. Interest rates were set at the state level, creating a challenge for calculations. In addition, if you operated from N.Y., you were bound by the state usury laws. In NY, at the time, the Washington Post recalls:

Because Citibank was based in New York, state laws regulated all Citibank credit card accounts.

And New York capped the interest rate that banks could charge at 18 percent (and only 12 percent on balances above $500) — no matter where the cardholder happened to live.

But true to Citi-style, ambitions for a credit card business were much broader:

Instead, Citibank executives envisioned a nationwide consumer bank delivered through cards rather than traditional branches. Unfortunately, the move, while ambitious, was poorly timed.

When Citibank initiated its nationwide campaign, it could live with these rates. In October 1979, however, the world changed. Then-Federal Reserve Chairman Paul Volcker launched an aggressive monetary experiment to wring inflation out of the economy.

Market interest rates skyrocketed. So did Citibank’s cost of funds. Yet, the price the bank could charge its credit card customers remained fixed. So every time a cardholder used their card, the bank lost money.

And said Walter Wriston, the legendary CEO:

“If you are lending money at 12 percent and paying 20 percent,” Citibank chief executive Walter B. Wriston lamented, “you don’t have to be Einstein to realize you’re out of business.” Wriston appealed to New York politicians for help. The legislature refused to budge.

The bank was in a fix. It could only escape the rate cap by leaving New York for a less restrictive state. And it could only do that if that state’s legislature invited Citi in. And so, in February 1980, Citibank lawyers knocked on Janklow’s door. South Dakota was one of the few states without an interest rate cap. Moreover, the state’s legislature was in session. They could act fast.

What made this all possible was the Marquette Decision, a Supreme Court Case that permitted rate exportability. The usury rate prevailed based on the state of the card issuance. N.Y. had a cap; South Dakota quickly lifted the interest rate cap.

Citibank offered just what the state needed, new industry, good jobs, and tax revenue. In March 1980, South Dakota’s legislature passed the “Citibank bill” inviting the company to open a subsidiary in the state with nearly unanimous approval — allowing it to shift its card-issuing business to the Mount Rushmore State.

Once in South Dakota, Citibank’s first move was to raise its interest rates. Citi cardholder rates rose from between 12 percent and 18 percent, depending on the consumer’s balance, to 19.8 percent for all balances, plus a $20 annual fee.

This move reshaped the banking and credit card industry. Citibank and South Dakota undermined the ability of every other state to regulate credit card interest rates. As a result, banks could now either move to South Dakota or threaten to, forcing most states to raise or eliminate interest rate ceilings, ending a critical consumer protection against excessive interest and long-term debt.

Both Citibank, NA and Wells Fargo Bank, NA, find their home base in Sioux Falls. As a result, the firms offer a more robust career path than the other large employer, Morell’s Beef Packing.

One thing they rarely mention about Sioux Falls. In the winter, with the wind chill, the air temperature can be 80 degrees below zero. That’s why employee parking lots have engine block heater connections. But, in the land of no-corporate income tax, that’s just a detail.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Ah, South Dakota, the usury state:

“ To protect consumers, many states have adopted usury laws capping the interest rates that lenders can charge borrowers. There is significant variation among state interest-rate limits: some states have adopted strict usury laws, some have enacted more permissive rules, and others have eliminated usury laws altogether. But federal preemption of state law has diminished the relevance of these differences when it comes to bank lending. Section 85 of the National Bank Act (NBA) allows federally chartered banks to “export” the maximum interest rates of their “home” states, meaning they can charge those rates when lending to borrowers in other states with stricter usury laws. Accordingly, a national bank headquartered in South Dakota—which has no interest-rate limits—need not abide by New York usury law when it lends to New York borrowers. Predictably, this regime has made more permissive states attractive destinations for banks’ credit-card operations.And these shifts have reduced the sway of states that favor stricter limits on high-cost lending.”

https://crsreports.congress.gov/product ... B/LSB10512

Yes there was a court ruling around a decade ago in a case called Madden v Midland (loan serving coming owned by PNC) that is shortened to “valid when made” which means you export the rules of the originating state. Had this conversation today with a private student lender which needs a second sponsor bank to run originations through and have a PE backed community bank board teed up and one of the first questions from the CEO asked was about various lending laws in the state. Obviously it’s an easy one and popular like GA, TX and FL opposed with the worst from their perspective being Southern district of NY and Alaska.

The valid-when-made doctrine is held to have originated with Nichols v. Fearson, an 1833 case, which found that "a contract, which, in its inception, is unaffected by usury can never be invalidated by any subsequent usurious transaction."[2] The doctrine became a part of common law after the National Bank Act was passed in 1864.[3] The act maintained, among other things, that national banks could only be held to the usury laws in their charter state, rather than the home state of a borrower.[4] Because of ambiguities in the language of the act, the courts generally treated the transfer of loans like the transfer of any other contract, allowing interest rates to remain fixed on loans that were sold or transferred. Under this model, protection from out-of-state usury laws was transferred with the loan.[5][6]

The valid-when-made doctrine was partly upheld in the landmark 1978 case Marquette National Bank of Minneapolis v. First of Omaha Service Corp.[7] In Marquette v. Omaha, the Supreme Court ruled that a nationally chartered bank could offer loans with the maximum interest rate allowed in its charter state to consumers in any other state, without being subject to another state's usury laws.[6] This ruling led many large national banks to move to states with high-interest rates.[6] After the ruling, courts generally held that debt buyers could collect interest at the rate originally set, despite not being subject to the same protections as national banks.[8] This dynamic became a major component of the "rate exportation model" of lending, under which national banks sold or transferred loans.[9]

Madden v. Midland Funding, LLC (2015–2019)
Edit
The case of Madden v. Midland Funding LLC in 2015 challenged the basic premise of valid when made doctrine. Regarding Madden, the U.S. Court of Appeals for the Second Circuit ruled that Midland Funding, LLC, a third-party debt buyer, could be subject to state usury laws after purchasing a loan from Bank of America, a protected national bank.[10] The Solicitor General of the United States submitted a brief that argued that the court's finding had been in error and was neither in keeping with the valid-when-made doctrine nor with the position of other circuit courts. However, Midland was denied certiorari by the Supreme Court in 2016.[11][12]

The Madden ruling immediately caused widespread uncertainty about the ability of banks to sell or transfer loans to third parties.[5] In particular, it was criticized for making it more difficult for high-risk, disadvantaged borrowers to obtain personal or business loans.[13][14] The ruling also prompted concerns that loans that had previously been legally valid might become usurious, opening up secondary lenders to civil and criminal charges.[13]

At the time of the decision, many legal and financial experts predicted that Madden would be limited in scope by subsequent rulings,[15] including the American Bankers Association who urged the creation of a "Madden fix" law to protect valid when made.[16] Multiple bills were proposed to implement a "Madden fix" law, including the Protecting Consumers’ Access to Credit Act 2017, which was passed by the U.S. House Of Representatives.[8] Opponents of the "Madden fix" laws argued that the valid when-made doctrine violated states' rights.[17]

OCC and FDIC decisions (2019–present)
Edit
In 2019, the Office of the Comptroller of the Currency (OCC) announced its intentions to reinforce valid when made. The OCC clarified that the interest rate of loans can remain intact after being sold to a secondary lender.[1] The Federal Deposit Insurance Corporation (FDIC) also reaffirmed and codified valid when made doctrine, arguing that Madden was a "deviation from longstanding notions of contract law" and had created market instability.[18]

On May 29, 2020, the OCC issued a final rule that was codified and valid when made. The rule was intended to address the legal ramifications of Madden and mitigate the damage to the secondary loan market. It stated that a loan that was not subject to a state usury law at the time of creation cannot subsequently become subject to it after being sold, transferred, or assigned in any way.[19]

The states of California, Illinois, and New York challenged the issuance of the rule, contending that the OCC had not considered the consequences of its ruling. This challenge was rejected by the U.S. District Court for the Northern District of California, which ruled in favor of the OCC on February 8, 2022.[20][19]

Think “valid-when-made” will apply in the wreckage of the global economy post a default, or will force majeur abound?

Ultimately “night makes right”-Nietzsche would argue it’s the more honest and honorable approach…

https://youtu.be/JuGMpwpkeuM

[Farfromgeneva]

Worth noting that the #2 GOP senator is expected to endorse Tim Scott:


https://www.msn.com/en-us/news/politics ... r-AA1bub0D

I'm sure I've heard his name at some point. But does the public know or care who John Thune is?

We're still at the stage of "if Trump is the nominee, I'll support him no matter what."

Maybe folks should?

https://www.paymentsjournal.com/south-d ... banks/amp/

South Dakota: Credit Card Haven or the Cayman Islands for Banks?

A fun read in today’s Washington Post about moving Citi to the thriving metropolis of Sioux Falls.

Brian Riley2 years Ago
For months in the early 1980s, I traveled from LaGuardia Airport in N.Y. to Minneapolis on either United or USAir, then from Minneapolis to Joe Foss Field in good old Sioux Falls. The downside of the plane change in MSP was that you’d have to get on a Beechcraft propeller plane flown by Mesaba Airlines.

Everyone loves a nice business trip to L.A. or SFO, but Sioux Falls was pretty radical at the time. And, yes, there are “falls” in Sioux Falls. The best hotel in town was the Holiday Inn in the center city, if you can call it that. If you were from New York and commuting to Sioux Falls, you’d know Minerva’s as the best restaurant in town. The Citi-joke was that the restaurant was so good, at least good enough to survive on 51st and Lexington Avenue, that the owner must have gotten to FSD through the witness protection program. However, workers did not realize the crunch of an N.Y. bagel.

Maybe too much background here, but if you wanted to motivate technical people transferred from NYC, you’d know that you’d better bring authentic N.Y. bagels if you tried to negotiate your requirements for the programming rock.

Back to the Washington Post:

Last week, Washington Post reporters exposed how global elites have used opaque trusts to shield wealth from tax authorities and the critical public. The story’s surprising detail was not the overt tax avoidance — activity we have come to expect. Rather, it was the setting: Sioux Falls, S.D.

When did the Mount Rushmore State, better known for bike rallies than banking, become an “offshore” haven for laundering ill-gotten fortunes? And why do U.S. authorities tolerate it?

The answer to the first question begins with a surprise meeting between executives from New York-based Citibank and South Dakota Gov. William Janklow (R) in February 1980. The bankers were there to talk about credit cards. Janklow was all ears.

Here’s the background:

Following the 1929 depression, a series of banking regulations curtailed interstate banking. First, the McFadden Act established the right to govern banks within their state. Then, in 1956, the Douglas Act forbid acquisitions of an interstate bank.

In the nascent days of credit cards, it was difficult for banks to operate lending products outside of their state. Interest rates were set at the state level, creating a challenge for calculations. In addition, if you operated from N.Y., you were bound by the state usury laws. In NY, at the time, the Washington Post recalls:

Because Citibank was based in New York, state laws regulated all Citibank credit card accounts.

And New York capped the interest rate that banks could charge at 18 percent (and only 12 percent on balances above $500) — no matter where the cardholder happened to live.

But true to Citi-style, ambitions for a credit card business were much broader:

Instead, Citibank executives envisioned a nationwide consumer bank delivered through cards rather than traditional branches. Unfortunately, the move, while ambitious, was poorly timed.

When Citibank initiated its nationwide campaign, it could live with these rates. In October 1979, however, the world changed. Then-Federal Reserve Chairman Paul Volcker launched an aggressive monetary experiment to wring inflation out of the economy.

Market interest rates skyrocketed. So did Citibank’s cost of funds. Yet, the price the bank could charge its credit card customers remained fixed. So every time a cardholder used their card, the bank lost money.

And said Walter Wriston, the legendary CEO:

“If you are lending money at 12 percent and paying 20 percent,” Citibank chief executive Walter B. Wriston lamented, “you don’t have to be Einstein to realize you’re out of business.” Wriston appealed to New York politicians for help. The legislature refused to budge.

The bank was in a fix. It could only escape the rate cap by leaving New York for a less restrictive state. And it could only do that if that state’s legislature invited Citi in. And so, in February 1980, Citibank lawyers knocked on Janklow’s door. South Dakota was one of the few states without an interest rate cap. Moreover, the state’s legislature was in session. They could act fast.

What made this all possible was the Marquette Decision, a Supreme Court Case that permitted rate exportability. The usury rate prevailed based on the state of the card issuance. N.Y. had a cap; South Dakota quickly lifted the interest rate cap.

Citibank offered just what the state needed, new industry, good jobs, and tax revenue. In March 1980, South Dakota’s legislature passed the “Citibank bill” inviting the company to open a subsidiary in the state with nearly unanimous approval — allowing it to shift its card-issuing business to the Mount Rushmore State.

Once in South Dakota, Citibank’s first move was to raise its interest rates. Citi cardholder rates rose from between 12 percent and 18 percent, depending on the consumer’s balance, to 19.8 percent for all balances, plus a $20 annual fee.

This move reshaped the banking and credit card industry. Citibank and South Dakota undermined the ability of every other state to regulate credit card interest rates. As a result, banks could now either move to South Dakota or threaten to, forcing most states to raise or eliminate interest rate ceilings, ending a critical consumer protection against excessive interest and long-term debt.

Both Citibank, NA and Wells Fargo Bank, NA, find their home base in Sioux Falls. As a result, the firms offer a more robust career path than the other large employer, Morell’s Beef Packing.

One thing they rarely mention about Sioux Falls. In the winter, with the wind chill, the air temperature can be 80 degrees below zero. That’s why employee parking lots have engine block heater connections. But, in the land of no-corporate income tax, that’s just a detail.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Ah, South Dakota, the usury state:

“ To protect consumers, many states have adopted usury laws capping the interest rates that lenders can charge borrowers. There is significant variation among state interest-rate limits: some states have adopted strict usury laws, some have enacted more permissive rules, and others have eliminated usury laws altogether. But federal preemption of state law has diminished the relevance of these differences when it comes to bank lending. Section 85 of the National Bank Act (NBA) allows federally chartered banks to “export” the maximum interest rates of their “home” states, meaning they can charge those rates when lending to borrowers in other states with stricter usury laws. Accordingly, a national bank headquartered in South Dakota—which has no interest-rate limits—need not abide by New York usury law when it lends to New York borrowers. Predictably, this regime has made more permissive states attractive destinations for banks’ credit-card operations.And these shifts have reduced the sway of states that favor stricter limits on high-cost lending.”

https://crsreports.congress.gov/product ... B/LSB10512

Yes there was a court ruling around a decade ago in a case called Madden v Midland (loan serving coming owned by PNC) that is shortened to “valid when made” which means you export the rules of the originating state. Had this conversation today with a private student lender which needs a second sponsor bank to run originations through and have a PE backed community bank board teed up and one of the first questions from the CEO asked was about various lending laws in the state. Obviously it’s an easy one and popular like GA, TX and FL opposed with the worst from their perspective being Southern district of NY and Alaska.

The valid-when-made doctrine is held to have originated with Nichols v. Fearson, an 1833 case, which found that "a contract, which, in its inception, is unaffected by usury can never be invalidated by any subsequent usurious transaction."[2] The doctrine became a part of common law after the National Bank Act was passed in 1864.[3] The act maintained, among other things, that national banks could only be held to the usury laws in their charter state, rather than the home state of a borrower.[4] Because of ambiguities in the language of the act, the courts generally treated the transfer of loans like the transfer of any other contract, allowing interest rates to remain fixed on loans that were sold or transferred. Under this model, protection from out-of-state usury laws was transferred with the loan.[5][6]

The valid-when-made doctrine was partly upheld in the landmark 1978 case Marquette National Bank of Minneapolis v. First of Omaha Service Corp.[7] In Marquette v. Omaha, the Supreme Court ruled that a nationally chartered bank could offer loans with the maximum interest rate allowed in its charter state to consumers in any other state, without being subject to another state's usury laws.[6] This ruling led many large national banks to move to states with high-interest rates.[6] After the ruling, courts generally held that debt buyers could collect interest at the rate originally set, despite not being subject to the same protections as national banks.[8] This dynamic became a major component of the "rate exportation model" of lending, under which national banks sold or transferred loans.[9]

Madden v. Midland Funding, LLC (2015–2019)
Edit
The case of Madden v. Midland Funding LLC in 2015 challenged the basic premise of valid when made doctrine. Regarding Madden, the U.S. Court of Appeals for the Second Circuit ruled that Midland Funding, LLC, a third-party debt buyer, could be subject to state usury laws after purchasing a loan from Bank of America, a protected national bank.[10] The Solicitor General of the United States submitted a brief that argued that the court's finding had been in error and was neither in keeping with the valid-when-made doctrine nor with the position of other circuit courts. However, Midland was denied certiorari by the Supreme Court in 2016.[11][12]

The Madden ruling immediately caused widespread uncertainty about the ability of banks to sell or transfer loans to third parties.[5] In particular, it was criticized for making it more difficult for high-risk, disadvantaged borrowers to obtain personal or business loans.[13][14] The ruling also prompted concerns that loans that had previously been legally valid might become usurious, opening up secondary lenders to civil and criminal charges.[13]

At the time of the decision, many legal and financial experts predicted that Madden would be limited in scope by subsequent rulings,[15] including the American Bankers Association who urged the creation of a "Madden fix" law to protect valid when made.[16] Multiple bills were proposed to implement a "Madden fix" law, including the Protecting Consumers’ Access to Credit Act 2017, which was passed by the U.S. House Of Representatives.[8] Opponents of the "Madden fix" laws argued that the valid when-made doctrine violated states' rights.[17]

OCC and FDIC decisions (2019–present)
Edit
In 2019, the Office of the Comptroller of the Currency (OCC) announced its intentions to reinforce valid when made. The OCC clarified that the interest rate of loans can remain intact after being sold to a secondary lender.[1] The Federal Deposit Insurance Corporation (FDIC) also reaffirmed and codified valid when made doctrine, arguing that Madden was a "deviation from longstanding notions of contract law" and had created market instability.[18]

On May 29, 2020, the OCC issued a final rule that was codified and valid when made. The rule was intended to address the legal ramifications of Madden and mitigate the damage to the secondary loan market. It stated that a loan that was not subject to a state usury law at the time of creation cannot subsequently become subject to it after being sold, transferred, or assigned in any way.[19]

The states of California, Illinois, and New York challenged the issuance of the rule, contending that the OCC had not considered the consequences of its ruling. This challenge was rejected by the U.S. District Court for the Northern District of California, which ruled in favor of the OCC on February 8, 2022.[20][19]

Think “valid-when-made” will apply in the wreckage of the global economy post a default, or will force majeur abound?

Or as Cheech once said to a cop:

“You can keep knocking but you can’t come in”

[CU88a]

Most Republicans would vote for Trump even if he's convicted of a crime, poll finds

https://www.npr.org/2023/04/25/11716609 ... cted-crime

So much for the party of law & order...

[Farfromgeneva]

Most Republicans would vote for Trump even if he's convicted of a crime, poll finds

https://www.npr.org/2023/04/25/11716609 ... cted-crime

So much for the party of law & order...

To believe Trump didn’t and hasn’t paid women to have sex and keep it quiet is to be so out of touch with reality as to be a lost cause.

Some faux intellectual who desperately wants to pretend to be thoughtful and likes to punch and run surely would attempt to rationalize it and claim nuance but of course that’s bad faith and pathetic behavior as well.

[a fan]

Big tip of the hat to Mike Pence, again.

I might get ahead of myself here, but wouldn't it be something to see Mike Pence plunge the final dagger into Trump, finishing him off in a debate where Pence lets his true views on Trump all hang out on stage? He didn't have a front row seat....he was actually in the play for four years.

“I believe that anyone who puts themselves over the Constitution should never be president of the United States. And anyone who asks someone else to put them over the Constitution should never be president of the United States again,” the former vice president said of his onetime boss, currently the front-runner for the 2024 GOP nomination.

[jhu72]

Big tip of the hat to Mike Pence, again.

I might get ahead of myself here, but wouldn't it be something to see Mike Pence plunge the final dagger into Trump, finishing him off in a debate where Pence lets his true views on Trump all hang out on stage? He didn't have a front row seat....he was actually in the play for four years.

“I believe that anyone who puts themselves over the Constitution should never be president of the United States. And anyone who asks someone else to put them over the Constitution should never be president of the United States again,” the former vice president said of his onetime boss, currently the front-runner for the 2024 GOP nomination.

... Chris Christie is doing a better job IMO.

[cradleandshoot]

Big tip of the hat to Mike Pence, again.

I might get ahead of myself here, but wouldn't it be something to see Mike Pence plunge the final dagger into Trump, finishing him off in a debate where Pence lets his true views on Trump all hang out on stage? He didn't have a front row seat....he was actually in the play for four years.

“I believe that anyone who puts themselves over the Constitution should never be president of the United States. And anyone who asks someone else to put them over the Constitution should never be president of the United States again,” the former vice president said of his onetime boss, currently the front-runner for the 2024 GOP nomination.

... Chris Christie is doing a better job IMO.

Yeah but Pence knows where the bodies are buried.

[a fan]

Big tip of the hat to Mike Pence, again.

I might get ahead of myself here, but wouldn't it be something to see Mike Pence plunge the final dagger into Trump, finishing him off in a debate where Pence lets his true views on Trump all hang out on stage? He didn't have a front row seat....he was actually in the play for four years.

“I believe that anyone who puts themselves over the Constitution should never be president of the United States. And anyone who asks someone else to put them over the Constitution should never be president of the United States again,” the former vice president said of his onetime boss, currently the front-runner for the 2024 GOP nomination.

... Chris Christie is doing a better job IMO.

Sure, but remember Pence is an evangelical....and connects with that crowd.

[a fan]

Big tip of the hat to Mike Pence, again.

I might get ahead of myself here, but wouldn't it be something to see Mike Pence plunge the final dagger into Trump, finishing him off in a debate where Pence lets his true views on Trump all hang out on stage? He didn't have a front row seat....he was actually in the play for four years.

“I believe that anyone who puts themselves over the Constitution should never be president of the United States. And anyone who asks someone else to put them over the Constitution should never be president of the United States again,” the former vice president said of his onetime boss, currently the front-runner for the 2024 GOP nomination.

... Chris Christie is doing a better job IMO.

Yeah but Pence knows where the bodies are buried.

+1

[jhu72]

Big tip of the hat to Mike Pence, again.

I might get ahead of myself here, but wouldn't it be something to see Mike Pence plunge the final dagger into Trump, finishing him off in a debate where Pence lets his true views on Trump all hang out on stage? He didn't have a front row seat....he was actually in the play for four years.

“I believe that anyone who puts themselves over the Constitution should never be president of the United States. And anyone who asks someone else to put them over the Constitution should never be president of the United States again,” the former vice president said of his onetime boss, currently the front-runner for the 2024 GOP nomination.

... Chris Christie is doing a better job IMO.

Sure, but remember Pence is an evangelical....and connects with that crowd.

... good point

[kramerica.inc]

WSJ:
Biden's age and health re-emerge as 2024 looms:
https://www.wsj.com/podcasts/opinion-po ... 9b4f11a98b

[NattyBohChamps04]

WSJ:
Biden's age and health re-emerge as 2024 looms:
https://www.wsj.com/podcasts/opinion-po ... 9b4f11a98b

If the presumptive R nominee wins, he'll be the oldest president in US history.

If the presumptive D nominee wins, he'll be the oldest president in US history.

[Seacoaster(1)]

WSJ:
Biden's age and health re-emerge as 2024 looms:
https://www.wsj.com/podcasts/opinion-po ... 9b4f11a98b

If the presumptive R nominee wins, he'll be the oldest president in US history.

If the presumptive D nominee wins, he'll be the oldest president in US history.

They’re both old. One is a complete sociopath and moron who doesn’t understand the system of government under which we live.

[DMac]

They are both too old.
Fixed that for you.

[MDlaxfan76]

They are both too old.
Fixed that for you.

Yup, most of us would certainly prefer a good, experienced, but younger person.
However, younger is definitely "trumped", by 'good' plus 'experienced'.

I think if Trump wasn't running, Biden would have happily stepped aside for a younger set of candidates on the Dem side. He'd have been "mission accomplished", defeated the worst possible person to have held the office in our history, managed the fight against and then recovery from COVID, achieved nearly unparalleled legislative gains with long term benefits, on a largely bi-partisan basis, etc...

But Trump's running and is the way out front runner for the GOP...And Biden legitimately feels that he's the best chance for Dems to win, comfortably, against Trump and MAGA. That may or may not be correct, but a unified front against the MAGA forces, whether led by Trump or DeSantis or someone else is probably the Dems best bet. A fraught primary campaign would likely hurt their chances.

Depending on his health and vitality during that second term, I wouldn't be surprised if he stepped down, though if his health and vitality is comparable to now, he'll have more directly responsible governing impact than Reagan did during his last 2 years. Biden is progressive enough to assuage the aspirations of his left but practical enough to accomplish moderate middle ground objectives.

The key is having a sound Cabinet and quality White House staff. Whether Biden continues to preside or the VP takes over, competent governance and no crazy scandals would be a likely continued positive.

2028, everyone has a primary...

[jhu72]

,,, which is what I think Christie is playing for, 2028.