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Full-Text Articles in Law

Why Supervise Banks? The Foundations Of The American Monetary Settlement, Lev Menand Jan 2021

Why Supervise Banks? The Foundations Of The American Monetary Settlement, Lev Menand

Faculty Scholarship

Administrative agencies are generally designed to operate at arm’s length, making rules and adjudicating cases. But the banking agencies are different: they are designed to supervise. They work cooperatively with banks and their remedial powers are so extensive they rarely use them. Oversight proceeds through informal, confidential dialogue.

Today, supervision is under threat: banks oppose it, the banking agencies restrict it, and scholars misconstrue it. Recently, the critique has turned legal. Supervision’s skeptics draw on a uniform, flattened view of administrative law to argue that supervision is inconsistent with norms of due process and transparency. These arguments erode the intellectual …


Federal Corporate Law And The Business Of Banking, Morgan Ricks, Lev Menand Jan 2021

Federal Corporate Law And The Business Of Banking, Morgan Ricks, Lev Menand

Vanderbilt Law School Faculty Publications

The only profit-seeking business enterprises chartered by a federal government agency are banks. Yet there is barely any scholarship justifying this exception to state primacy in U.S. corporate law.

This Article addresses that gap. It reinterprets the National Bank Act (NBA) the organic statute governing national banks, the heavyweights of the financial sec- tor-as a corporation law and recovers the reasons why Congress wrote this law: not to catalyze private wealth creation or to regulate an existing industry, but to solve an economic governance problem. National banks are federal instrumentalities charged with augmenting the money supply-- a delegated sovereign privilege. …


A Better Madden Fix: Holistic Reform, Not Band-Aids, To Modernize Banking Law, Matthew J. Razzano Jul 2020

A Better Madden Fix: Holistic Reform, Not Band-Aids, To Modernize Banking Law, Matthew J. Razzano

University of Michigan Journal of Law Reform Caveat

Historically, state usury laws prohibited lending above certain interest rates, but in 1978 the Supreme Court interpreted the National Bank Act (NBA) to allow chartered banks to issue loans at rates based on where they were headquartered rather than where the loan originated. States like South Dakota virtually eliminated interest rate ceilings to attract business, incentivizing national banks to base credit operations there and avoid local usury laws. In 2015, however, the Second Circuit decided Madden v. Midland Funding, LLC and reversed long-standing banking practices, ruling that non-chartered financial institutions were not covered by the NBA and were therefore subject …


Madden V. Midland Funding Llc: Uprooting The National Bank Act’S Power Of Preemption, Andrew Silvia Oct 2017

Madden V. Midland Funding Llc: Uprooting The National Bank Act’S Power Of Preemption, Andrew Silvia

Chicago-Kent Law Review

No abstract provided.


Online Lenders Shouldn't Get Mad Over Madden, Benjamin Lo Jun 2017

Online Lenders Shouldn't Get Mad Over Madden, Benjamin Lo

The Journal of Business, Entrepreneurship & the Law

The Second Circuit’s surprising decision in Madden v. Midland Funding caused consternation within the financial services industry. There, the Madden Court held that the National Bank Act’s pre-emption of state usury law did not apply to consumer debt sold by banks to third parties. Under the Second Circuit’s ruling, third-party buyers could not be certain of loan values, potentially making consumer finance markets less liquid. This decision immediately sparked concerns from the alternative finance industry, which worried that the secondary market for consumer debt would dry up and reduce consumer credit availability. It also alarmed financial technology startups such as …


Preemption, Agency Cost Theory, And Predatory Lending By Banking Agents: Are Federal Regulators Biting Off More Than They Can Chew , Christopher L. Peterson Jan 2007

Preemption, Agency Cost Theory, And Predatory Lending By Banking Agents: Are Federal Regulators Biting Off More Than They Can Chew , Christopher L. Peterson

American University Law Review

A pitched battle is currently being waged for control of the American banking industry. For over a hundred years, the federal and state governments have maintained a complex, but relatively stable truce in their contest for power. At the beginning of our republic, state governments were the primary charterers and regulators of banks. In the wake of the Civil War, the National Bank Act created parity between federal and state banks, cementing the notion of a dual banking system that endured through the twentieth century. But in the past five years, the federal government has increasingly used its powers under …


The Lifeline Banking Controversy: Putting Deregulation To Work For The Low-Income Consumer, Edward L. Rubin Jan 1992

The Lifeline Banking Controversy: Putting Deregulation To Work For The Low-Income Consumer, Edward L. Rubin

Indiana Law Journal

Symposium: The Financial Services Industry: A New World (Dis)Order?


The Propriety Of Benefit-Spreading Regulations Under The 10% Lending Limit Of The National Bank Act, Michigan Law Review Jun 1980

The Propriety Of Benefit-Spreading Regulations Under The 10% Lending Limit Of The National Bank Act, Michigan Law Review

Michigan Law Review

This Note examines whether the ten percent lending limit of the National Bank Act should be used to promote benefit-spreading. Section I evaluates the legislative and judicial history of the lending limit and concludes that Congress never intended the Comptroller to issue regulations to foster benefit-spreading. Section II examines the practical ramifications of the benefit-spreading regulations. It concludes that the lending limit cannot effectively foster benefit-spreading without undermining the risk-reducing function of the statute; that compliance with the benefit-spreading regulations is costly while the penalties for noncompliance are inappropriate and unfair; and that existing statutes better promote benefit-spreading while avoiding …


Virginia Law Of Interest And Usury, John W. Edmonds Iii Jan 1975

Virginia Law Of Interest And Usury, John W. Edmonds Iii

University of Richmond Law Review

The concept of a limitation upon the charges that may be imposed for the hire of money is hardly modem. Although it may not be the oldest usury law, a reference to Deuteronomy should suffice: "Unto a stranger thou mayest lend upon usury; but unto thy brother thou shall not lend upon usury."