Regulatory Alerts2019-12-06 | 2019-25689Federal Deposit Insurance Corporation: Federal Interest Rate Authority
The Federal Deposit Insurance Corporation issued a notice of proposed rulemaking to clarify the interest rate authority of State-chartered banks and insured branches of foreign banks under Section 27 of the Federal Deposit Insurance Act. The proposed regulations would establish that these institutions may charge interest at the rate permitted by their home State or one percent above the ninety-day commercial paper rate, whichever is greater, and that this permissibility is determined at the time the loan is made. Additionally, the rule aims to resolve legal uncertainty regarding loan assignments by stating that subsequent events, such as the sale of a loan, do not affect the validity of the interest rate terms originally authorized.
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