Walter Zalenski Quoted in Bloomberg BNA Article, "Justices Seek U.S. View on Midland Funding; Order Could Open Door for OCC to Play Role"Walter E. Zalenski
Walter Zalenski was quoted in Chris Bruce's Bloomberg BNA article, "Justices Seek U.S. View on Midland Funding; Order Could Open Door for OCC to Play Role," on March 21, 2016.
The U.S. Supreme Court March 21 asked the Solicitor General for advice on whether to review a federalappeals court ruling that eases state-law claims on certain loans assigned by or purchased from national banks (Midland Funding LLC v. Madden, U.S., No. 15-cv-00610, briefing requested 3/21/16).
Midland Funding, a unit of Encore Capital, in November asked the court to review a May ruling by the U.S. Court of Appeals for the Second Circuit, which said the National Bank Act doesn’t preempt state-law usury claims. Saliha Madden brought a putative class case that said Midland Funding violated the Fair Debt Collection Practices Act by trying to collect on a loan with rates illegal under New York law (100 BBD, 5/26/15).
The case is being closely watched because of its implications for credit markets, national bank preemption, debt collection, and its impact on marketplace lenders, some of which already are moving to restructure their businesses to avoid similar claims (40 BBD, 3/1/16).
OCC on Sidelines? Walter E. Zalenski, a partner with Buckley Sandler in Washington, D.C., March 21 said one effect of the court’s invitation to hear the Solicitor General’s views is to highlight the role of the Office of the Comptroller of the Currency, the agency that charters and regulates national banks.
So far, the OCC, which in past years has aggressively defended national bank preemption, has remained silent about the case, according to Zalenski.
‘‘In the district court, the Second Circuit appeal, the petition for rehearing, and in the Supreme Court briefing, one voice has been noticeably absent from the Madden debate,’’ Zalenski told Bloomberg BNA March 21. ‘‘Specifically, the Office of the Comptroller of the Currency has thus remained entirely on the sidelines and declined to file a single amicus brief. This silence contrasts starkly with the OCC’s historic involvement and advocacy in connection with preemption-related litigation and policymaking,’’ he said.
The court’s March 21 action tees up the question for the OCC yet again, this time with perhaps longer-term implications, according to Zalenski.
‘‘If the invitation fails to elicit a pro-preemption position, it suggests that the OCC can no longer be counted on as a reliable advocate on behalf of preemption and national bank powers,’’ he said.
Originally published in Bloomberg BNA; reprinted with permission.