Online Lenders Alliance Statement on OCC’s Guidance on “Valid When Made” Doctrine

Following the news that the Office of the Comptroller of the Currency released their NNPR on “Valid When Made” doctrine OLA issued the following statement:

We applaud the recent actions taken by the OCC to support bank-fintech partnerships through a proposed rule that would mitigate the consequences of the Second Circuit Court of Appeals’ ruling in Madden v. Midland. There is still much more work to be done, however.

Yesterday’s action is an important step, but it will have limited impact unless federal regulators clarify the rules for banks that partner with fintech companies. These rules have also been questioned in the courts, which has resulted in a limited ability for banks and many OLA members to work together.

Last year, the Department of the Treasury issued a report which identified regulatory improvements to better support nonbank financial institutions, embrace fintech, and promote innovation. That report underscored the need for comprehensive research on the true cost of providing credit and proposed ways to streamline and modernize the regulatory environment. This action helps to achieve those goals.

OLA will continue its advocacy efforts, working with federal regulators and Congress, to ensure that the issues raised by “Valid-When-Made” and “True Lender” are addressed in a way that is consistent with safe and sound lending practices. This, in turn, will help these partnerships meet the growing demand for innovative financial products and services.

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