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Valid-When-Made and True Lender Doctrines: Usury Issues With Partnerships Between Bank and Nonbank Lenders

This program is cancelled

A live 90-minute premium CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Tuesday, August 6, 2024

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

The CLE webinar will analyze the valid-when-made and true lender doctrines and issues that can arise when banks and nonbanks enter partnerships to offer consumer loan products. The panel discussion will include the evolution of both issues under national banking laws, a review of leading cases construing these doctrines, and relevant OCC rules.


In today's banking environment, a nonbank partner often markets loans, processes applications, applies underwriting criteria and services, and collects loans. At the same time, a federal or state-chartered bank originates the loans. The bank can then charge consumers interest rates that exceed many states' usury laws.

States and consumer protection groups have challenged this practice. The Second Circuit in Madden v. Midland Funding L.L.C. held that loans transferred to a third-party debt collector were not entitled to the National Bank Act's preemption protections. In response to Madden, the OCC, and the FDIC issued rules confirming the principle that a bank loan that is permissible when originated is not affected by the bank's subsequent sale of the loan. Several states unsuccessfully challenged those rules in court.

Nonbank partnerships have also been challenged because the bank that originated the loan was not the "true lender," so the nonbank is not entitled to rely on the interest rate authority available to the bank. The OCC issued a regulation outlining when a national bank would be deemed the true lender. Congress overturned that regulation in 2021 under the Congressional Review Act. The ability of nonbank lenders to team with banks to make loans that exceed state usury limits remains subject to potential challenges.

Listen as our authoritative panel examines the current state of the valid-when-made and true lender doctrines and actions banks and their nonbank partners can take to avoid usury and related claims.



  1. Background on valid-when-made and true lender doctrines
    1. Federal preemption of state usury laws
    2. Evolution of rent-a-bank and bank partnership arrangements
    3. Valid-when-made
    4. True lender doctrine
    5. Dodd-Frank and OCC preemption powers
    6. State-chartered vs. national banks
  2. Madden v. Midland Funding
  3. OCC rules regarding valid-when-made doctrine and true lender doctrine
  4. Application in recent case law
  5. Regulatory and licensing considerations for fintech companies
  6. Implications for banking partnerships going forward


The panel will review these and other vital issues:

  • How have banks and their nonbank partners taken advantage of federal preemption of state usury laws?
  • What was the impact of the Madden case and subsequent OCC regulations on the valid-when-made doctrine?
  • To what extent has the true lender doctrine been contested by courts in recent litigation, and what has been the outcome?
  • What steps can federal and state-licensed banks take when partnering with nonbanks to ensure they comply with applicable usury laws?


Brennan, Catherine
Catherine M. Brennan

Hudson Cook

Ms. Brennan assists national and state banks, investment banks, commercial finance companies, savings associations,...  |  Read More

Campbell, Leah
Leah M. Campbell

Senior Attorney
Bradley Arant Boult Cummings

Ms. Campbell has significant experience representing financial services and insurance company clients in both federal...  |  Read More