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Does “Valid When Made” Apply To Evidences Of Indebtedness Qualified Under The CSL?

Many have expressed disappointment that the U.S. Supreme Court denied certiorari in Midland Funding, LLC v. Madden.  The question presented by the petitioners in the case was as follows: Whether the National Bank Act, which preempts state usury laws regulating the interest a national bank may charge on a loan, continues to have preemptive effect after the national bank has sold…

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Court Holds That Exempt Lender May Violate California Usury Statute

If you’re interested in California’s usury law, you have to look in several places: the Constitution, uncodified initiative measures, codes and case law.  When Woodrow Wilson was occupying the White House, the people of California approved a series of initiative measures with respect to interest rates.  Although technically uncodified, these provisions can be found in Section 1916-1 to…

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Court Explicates Scope of Usury Exemption For Real Estate Brokers

Artistotle didn’t think much of the idea of paying interest:  εὐλογώτατα μισεῖται ἡ ὀβολοστατικὴ διὰ τὸ ἀπ᾽ αὐτοῦ τοῦ νομίσματος εἶναι τὴν κτῆσιν καὶ οὐκ ἐφ᾽ ὅπερ ἐπορίσθη. μεταβολῆς γὰρ ἐγένετο χάριν,  ὁ δὲ τόκος αὐτὸ ποιεῖ πλέον (ὅθεν καὶ τοὔνομα τοῦτ᾽ εἴληφεν: ὅμοια γὰρ τὰ τικτόμενα τοῖς γεννῶσιν αὐτά ἐστιν, ὁ δὲ τόκος γίνεται νόμισμα ἐκ…

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Certification Pursuant To Section 25100(o) – Why It Still Matters (Part 2) And A Comment on H.R. 2483

Section 15100(o) and Usury Yesterday, I wrote about the continued significance of certification by the Commissioner of Corporations of national securities exchanges pursuant to Section 25100(o) of the Corporations Code.  Today is Part 2 of that discussion. As discussed in this earlier post (“The ‘Usury Permit’ – Fact or Fiction?”), the California Constitution imposes limitations on the…

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The “Usury Permit” – Fact Or Fiction?

The California Constitution covers many things – everything from the right of privacy (Art. I, Sec. 1) to the rate of interest that may be imposed on a loan or forbearance (Art. XV). Occasionally, I’m asked about how to obtain a “usury permit” from the Department of Corporations.  In fact, the legislature has inserted several exemptions from the constitutional usury…

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Usury Exemption Bites Back

Last week, I wrote about the oft overlooked California Finance Lenders (CFL) law.  In general, that law provides that anyone engaged in the business of making consumer or commercial loans must obtain a license from the Department of Corporations (unless an exemption is available). CFL licensees do enjoy one benefit.  They constitute a class of “exempt persons”…

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“License? We Don’t Need No Stinking License”

The Department of Corporations’ jurisdiction is not limited to the Corporate Securities Law of 1968.  In fact, it has an entire division dedicated to financial services regulation.  The Department’s Financial Services Division, or FSD, has responsibililty for administering the following six laws:   California Deferred Deposit Transaction Law California Finance Lenders Law California Foreclosure Prevention Act California…

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