Additional Legal Considerations

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来自 Duke University 的课程

FinTech Law and Policy

6 个评分

Duke University

FinTech Law and Policy

6 个评分

Being a successful FinTech firm requires more than just great technology; it also requires an understanding of the laws and regulations applicable to your business. This course will provide you with that understanding. You will learn about the critical legal, regulatory, and policy issues associated with cryptocurrencies, initial coin offerings, online lending, new payments and wealth management technologies, and financial account aggregators. In addition, you will learn how regulatory agencies in the U.S. are continually adjusting to the emergence of new financial technologies and how one specific agency has proposed a path for FinTech firms to become regulated banks. You will also learn the basics of how banks are regulated in the U.S. If you are unfamiliar with how these new financial technologies work, fear not. We will begin each new course section with a high-level overview of the underlying technology. While the course is principally focused on the U.S. FinTech industry, we cannot possibly cover every relevant legal and regulatory issue. Therefore, this course should not be construed as legal advice. Rather, the goal of the course is to familiarize you with the key legal and regulatory challenges FinTech firms in various sectors face, as well as the critical policy debates that are occurring in Washington D.C. and state capitals across the country.

从本节课中

FinTech Lending

This module will introduce you to the various types of FinTech lending models and the regulatory treatment of these lenders. You will learn how many FinTech lenders are partnering with regulated banks to get around the state-by-state restrictions that apply to non-bank lenders.

Vulnerabilities of FinTech Credit6:45

Additional Legal Considerations3:08

与讲师见面

Lee Reiners, CFA
Executive Director, Global Financial Markets Center
Duke University School of Law

I'd like to conclude this module by talking about

some additional legal considerations that FinTech lenders need to take into account.

Specifically, a recent court decision in the United States Court of Appeals for

the Second Circuit has challenged the valid-when-made

doctrine which underpins the relationship between FinTech credit providers,

and the banks they partner with.

In this decision and what's known as a Madden versus Midland case,

the Second Circuit found that

a non-bank entity taking an assignment of debts originated by

a national bank is not entitled to protection

under the National Bank Act from state-law usury claims.

The valid-when-made doctrine means that a loan that is

valid at its inception cannot become usurious,

or violates state interest rate restrictions upon

subsequent transfer to another entity even if that entity is not a bank.

This doctrine is a long-held legal principle has

been universally relied on in the lending business,

and this principle is no longer valid as a result of the Second Circuit decision.

Banks are severely limited on who they can sell their loans to,

and the legal and commercial landscape for loan origination and

sales activities will become at the very least materially less predictable.

The Second Circuit's decision has already had an impact on

the FinTech lending industry in

the Second Circuit states of New York Connecticut and Vermont.

Some FinTech lenders have decided to exclude

those states from their marketing and lending programs,

or have decided to cap interest rates in

those states in accordance with state usury limits.

In securitization transactions, loans to borrowers in New York, Connecticut and

Vermont are sometimes excluded from the pools

of loans to be purchased by the securitization vehicle,

and a few FinTech lenders have decided to obtain

state lending licenses instead of relying on National Bank preemption

which allows them to partner with a bank who originates

the loans and thereby get around the state by state interest rate restrictions.

This graph highlights the impact the Madden decision has had on

lending in the Second Circuit states of Connecticut, New York, and Vermont.

It shows the growth in loan volume in

the time period immediately after the original Madden decision,

broken down by borrower's credit score.

We see that for borrowers with the highest credit scores the impact was

minimal with loan growth being roughly the

same in the Second Circuit as it was in other circuits,

but as you slide down the credit score scale you begin to notice

that post Madden loan growth in

the Second Circuit was less than what it was in other circuits.

In fact, for Second Circuit borrowers with the worst credit scores lending actually

declined in the wake of the Madden decision

while increased by over 100 percent everywhere else.

Some policymakers have expressed concern around the impact

the Madden decision has had on consumers access to credit,

and the overall uncertainty it has created in lending markets.

New legislation has been introduced in

Congress that would enshrine the valid-when-made principle into federal law.

However, that legislation is somewhat controversial,

and it's difficult to predict if it will ever become law

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