” By contrast, “Advance America has no control or authority over the loan approval process, underwriting criteria, credit terms, credit standards or the terms and conditions of the loans between BankWest and its Georgia borrowers.” Not only that, but Advance America is not even a party to the loan agreement. ” Nor does Advance America have a legal right to the loan receivables. ” 2
Instead, ” [t]he Loan Agreement is a promissory note between the borrower and BankWest, which, among other things, clearly states that BankWest is the lender on the loan, and obligates the borrower to repay the loan with interest to BankWest on or before the stated maturity date
Advance America bears no risk of loss of principal, because it advances none of the principal. BankWest advances all of the principal and bears all of the risk that principal will be lost. The only risk of loss that Advance America has is for part of the loan revenues (the finance charges).
The way the contractual loss assignments have played out in the real world of cash advance loans in Georgia is that BankWest has borne twice as much of the loan loss as Advance America. The record contains this sworn statement about the actual loss data for the fourteen-month period just before the filing of the motion for in through , the Loss Rate Standard on the aggregate portfolio of loans made by Bankwest to Georgia borrowers was approximately 12.5%. Thus, BankWest was responsible for approximately 68% of all loan losses incurred during that period.” 3 So, Advance America suffered less than one-third of the losses, BankWest more than two-thirds.
The affidavits show that “BankWest also establishes, in its sole discretion, the terms and features of the loans, including the loan amounts, fees and charges, interest rate, repayment terms, credit limits and credit standards
The facts, then, are that BankWest is the true lender. It is not only identified as such in the loan documents, but it also performs all of the critical loan decision-making functions, supplies all of the funds for the loan, is the only one exposed to any loss of principal, and has borne most of the loan losses that have actually occurred.
The factual spinning and loaded language of the majority opinion aside, the real defect in that opinion is its express preemption analysis. The Supreme Court has instructed us that: “In deciding whether a federal law pre-empts a state statute, our task is to ascertain Congress’ intent in enacting the federal statute at issue. Pre-emption . . . is compelled [when] Congress’ command is explicitly stated in the statute’s language. . . .” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95, 103 S. Ct. 2890, 2899, 77 L. Ed. 2d 490 (1983) (internal quotations omitted). 4 Here, Congress’ preemptive command is explicitly stated in the statutory language. Yet the majority decision does not obey that clear, compelling command.
The relevant portion of FDIA § 27(a) plainly says that “State-chartered insured depository institutions . . . may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section,. . . charge on any loan . payday loans in Gahanna. . interest . . . at the rate allowed by the laws of the State . . . where the bank is located.” 5 12 U.S.C. § 1831d(a) (emphasis added). The question is not whether Congress intended to preempt state laws inconsistent with the right it created on behalf of out-of-state banks. The preemptive command could not be clearer. To the extent that “any State constitution or statute” attempts to define, condition, impinge upon, regulate, restrict, or otherwise affect the right of an out-of-state bank to charge an interest rate permitted under the laws of its charter state, that state law is preempted.