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Jeff Naimon Quoted in Law360 Article, "Ruling Opens Door to CFPB Enforcement of State Usury Laws"

Jeffrey P. Naimon

Jeff Naimon was quoted in Evan Weinberger's Law360 article, "Ruling Opens Door to CFPB Enforcement of State Usury Laws," on September 2, 2016.

Although the ruling is only at the district court level, it could have a major impact on the way banks, financial technology firms like marketplace lenders, and other firms operate, said Jeffrey Naimon, a partner at Buckley Sandler LLP.

But by setting the test of what institution is the true lender on any loan product using a pure economic substance test as argued by the CFPB, and then allowing the bureau to bring a claim against CashCall for marketing and servicing loans that were not valid in 16 states, Judge Walter is giving the bureau the ability to enforce state interest rate caps using its UDAAP authority, Naimon said.

“It’s a bootstrap of state law as a federal UDAAP, which is something that people have been concerned about,” he said.

“It’s not as if there aren’t eager state actors to enforce state usury laws,” Naimon said.

And that could significantly alter the fintech business model, putting banks more in the driver’s seat, Naimon said.

“It clearly changes the model, and it changes which banks will want to be in it,” he said.

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