A Supreme Court order this week forces the Obama Administration to make a decision: either save consumers tens of billions of dollars at the expense of debt collectors, car loan specialists, and student lenders, or defend those financial entities.
In a one-line order, the justices on Monday asked Solicitor General Donald Verrilli, the legal representative for the federal government in Supreme Court matters, to file a brief in the case of Madden v. Midland Funding, “expressing the views of the United States.”
In Madden, a class-action case, borrowers argued that loans sold by a bank to a debt collector should be subject to the usury law in New York state, which limits the interest rate that can be charged. The 2nd Circuit Court of Appealsagreed, and Midland Funding appealed to the Supreme Court. Legal experts are following the case closely, since it could, after nearly 40 years, herald a return to prominence for state-based usury laws, a key safeguard against predatory lending.
“Does the White House stand for consumer protection, or will it support Wall Street when no one is looking?” asked Adam Levitin, a law professor at Georgetown University. Levitin, a pioneer of the argument that state usury laws apply to non-banks, believes the White House’s views will likely determine whether the Supreme Court takes the case.