Office of the Comptroller of the Currency (OCC) Federal Deposit Insurance Corporation (FDIC)

12 CFR § 7.4001(e) (OCC) 12 CFR § 160.110(d) (OCC – for federal savings associations) 12 CFR § 331.4(e) (FDIC) These were finalized in 2020 to codify the “valid-when-made” doctrine and extend it to non-bank purchasers of loans.

Permissible Interest on Loans That Are Sold, Assigned, or Otherwise Transferred (OCC/FDIC Final Rule, 2020)

The 2020 rule codified the "valid-when-made" doctrine, allowing any interest rate that was legal at the time a national bank issued a loan to remain valid even after that loan is sold—regardless of the buyer. This enables “rent-a-bank” schemes, where non-bank lenders use national banks to evade state usury caps, then buy back the high-interest loans. The rule facilitates predatory lending, consolidates market power among fintech platforms and private equity lenders, and strips states of their historical authority to regulate loan terms.

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Historically, national banks could export interest rates from their charter state, but only so long as the bank held the loan. Courts and regulators recognized that once a non-bank entity purchased the loan, state laws applied. In 2015, the Madden v. Midland ruling reaffirmed that principle. The 2020 OCC and FDIC rules overturned that precedent by codifying the “valid-when-made” doctrine, allowing loan buyers to preserve high rates indefinitely—undermining state-level consumer protections and enabling a surge in exploitative fintech lending models.

This rule invites abuse. Predatory lenders use national banks as pass-throughs, creating a two-tier system: one where banks enjoy full federal preemption, and one where non-banks, via loopholes, get the same privileges without the same oversight. The rule accelerates consolidation in the small loan market, empowers private equity rollups of lending platforms, and strips states of their long-standing authority to cap interest rates. Rescinding it would restore balance, empower state enforcement, and limit monopolistic rent extraction from financially vulnerable populations.

12 CFR § 7.4001(e), § 160.110(d), and § 331.4(e) would be deleted in full. OCC and FDIC regulations would no longer extend interest rate preemption beyond the originating national bank. State usury laws would again apply to loans once they are sold to non-bank entities, consistent with historical precedent and the Madden v. Midland ruling.

Rodney E Hood

Acting Comptroller of the Currency