U.S. Supreme Court Declines to Consider Whether National Bank Act Preemption Extends to Purchasers of Debt Originated by National Banks
By Andrew C. Glass and Roger L. Smerage
On Monday, the United States Supreme Court decided not to review whether National Bank Act preemption, which provides national banks with a safe harbor from state usury laws, extends to third-parties that purchase and collect debt originated by national banks. The decision to deny certiorari in Midland Funding, LLC v. Madden, No. 15-610 (U.S. Nov. 10, 2015) (“Madden”), leaves intact a May 2015 decision of the Court of Appeals for the Second Circuit. The Second Circuit had ruled that National Bank Act preemption only applies to purchasers of national-bank-originated debt where the purchaser is a subsidiary or agent of, or is otherwise acting on behalf of, a national bank. (The K&L Gates alert regarding the Second Circuit decision can be found here.)