The US Supreme Court recently decided not to hear the Madden vs Midland case, resulting in a continued lack of clarity surrounding national and state usury rates. The move has led to marketplace lending platforms taking steps to adapt to the ruling, as well as other participants questioning the reasoning behind the case and the effect it will have on the industry.
RK&O partner Vincent Basulto spoke with Structured Credit Investor and explained that there are various theories as to why the case was not heard. “It’s a lot to do with deference to the Solicitor General. He also pointed out that the Madden case just simply wasn’t a good case to hear because the argument hadn’t been made well enough by either side from the outset,” he said.
Mr. Basulto also commented on the implications of the ruling and what impact it may still have, noting that “Given the response of the Solicitor General, it seems unlikely that other courts will adopt the Madden ruling. While it’s possible other courts will point to the Madden ruling and seek to use it as a precedent, it would be hard for them to issue a decision in opposition to the strong view of the Solicitor General.”