In the wake of the Tenth Circuit’s decision in National Association of Industrial Bankers v. Weiser, 159 F.4th 694 (10th Cir. 2025), Oregon legislators have once again introduced legislation that would “opt out” of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), pursuant to the opt-out right conferred by Section 525 of that Act. The proposed legislation would prohibit out-of-state FDIC‑insured, state-chartered banks from making consumer finance loans of $50,000 or less to Oregon borrowers using the banks’ home-state interest rates if those rates exceed Oregon’s 36% interest rate cap. This same legislation failed to pass in 2025; this year, the House Committee on Commerce and Consumer Protection has approved H.B. 4116 over the objections of some legislators, who proposed alternative legislation that would allow Oregon to study the proposed law’s impact before enacting it.
Section 521 ensures that FDIC‑insured, state-chartered banks can exercise the same interest rate authority as national banks, which is empowered by Section 85 of the National Bank Act, to charge interest at the rate allowed by the laws of the State where the bank is “located,” regardless of the borrower’s location. See Marquette Nat. Bank of Minneapolis v. First of Omaha Serv. Corp., 439 U.S. 299, 313(1978). As we have discussed previously, DIDMCA leveled the playing field for state-chartered banks by allowing them to make loans at their home-state’s rates, even if the borrower lived in another state that capped interest rates below the banks’ home-state rate.
Supporters of H.B. 4116 hope to prevent state banks chartered in other states from charging interest rates allowable in their home states on loans to Oregon residents. But whether Oregon can dictate the interest rate set by out-of-state state banks (based on their own state’s laws) is an open question.
Litigation is still pending with respect to Colorado’s 2023 opt out from DIDMCA. The District Court in Colorado held that “loans made in such State” in Section 525 of DIDMCA encompassed only loans made by state banks located in Colorado, and therefore Colorado’s opt out did not limit the interest that could be charged to Colorado borrowers by state banks located outside Colorado. The District Court entered an injunction to prevent enforcement of the Colorado interest rate limits against out-of-state state banks. However, as we have previously reported, in National Association of Industrial Bankers v. Weiser, the Tenth Circuit reversed that ruling in a 2-1 decision, holding that a loan is “made” for purposes of the opt-out provision in Section 525 of DIDMCA in both the state where the bank is located and the borrower’s state, meaning that Colorado’s usury limits will apply to loans made to Colorado borrowers by out-of-state state banks. A petition for rehearing en banc is still pending, so the District Court’s injunction against enforcement of the Colorado opt-out statute remains in effect.
Iowa and Puerto Rico are the only jurisdictions, besides Colorado, that are currently opted out from Section 521 of DIDMCA. However, several other states have considered opt-out legislation in recent years, but none have been signed into law. Opting out could displace or erode long-standing legal doctrines that ensure enforceability of loan agreements. Such a legal change could, in turn, impact the ability of Oregon-chartered banks to do business, because of increased risks relating to servicing, securitization, or purchasing of Oregon-originated loans. As demonstrated by the proposed Oregon bill, the Tenth Circuit’s decision is likely to spur a renewed interest in opting-out by some states but that remains to be seen.
As we reported recently, the “American Lending Fairness Act of 2026,” introduced in Congress by Senator Moreno and Congressman Davidson, would effectively reverse the Tenth Circuit’s decision, eliminate future opt outs from DICMCA, and provide that a state’s opt out from DIDMCA cannot be used to limit the interest rates charged by out-of-state state-chartered depository institutions in accordance with their own states’ laws.