Banking and Finance Law Daily Wrap Up, PREEMPTION—Trade groups express support of interest rate preemption bill, (Sep 16, 2026)

By Colleen M. Svelnis, J.D.

The coalition of trade groups warned that Oregon litigation could produce a Ninth Circuit ruling conflicting with the Tenth Circuit and deepen a patchwork of state lending laws.

Twelve financial-services trade groups urged the House Financial Services Committee to support the bipartisan American Lending Fairness Act of 2026, H.R. 7866, which was scheduled for markup at the committee’s September 16 meeting. The legislation would restore federal interest rate preemption for interstate lending by state-chartered institutions. The letter, which was addressed to House Financial Services Committee leadership, argues that more than 40 years of federal authority places a loan where a bank or credit union performs its loan-making functions—typically its state of charter—not where the borrower lives.

The legislation was introduced (see Banking and Finance Law Daily, Feb. 13, 2026) in response to a recent Tenth Circuit decision that allowed states to impose their caps on out of state lenders. The measure clarifies that states may opt out of federal preemption only for loans made by their own chartered institutions. The legislation was introduced in Congress in February 2026 by Sen. Bernie Moreno (R-Ohio) and Rep. Warren Davidson (R-Ohio). The bill would restore federal interest rate preemption for interstate lending by state-chartered institutions and respond to a recent Tenth Circuit decision that allowed states, including Colorado, to impose their caps on out of state lenders. The measure clarifies that states may opt out of federal preemption only for loans made by their own chartered institutions.

The bill is a narrow amendment to the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). The letter describes DIDMCA Section 525 as allowing a state to opt out and regain jurisdiction over its state-chartered institutions’ lending rights and loans made in that state. The groups say that reading is necessary to keep state-chartered lenders on the same footing as national banks when making interstate loans. The Conference of State Bank Supervisors, which the letter identifies as a supporter, said the bill would “restore certainty to the DIDMCA framework” while preserving each state’s authority over its own chartered institutions.

State opt-outs. Colorado opted out of DIDMCA in 2023, and Oregon followed earlier in 2026, according to the trade groups. They said both states seek to apply their jurisdiction to loans made to residents by state institutions chartered elsewhere. The letter describes Colorado and Oregon as extending their opt-outs beyond in-state institutions. Industry associations have challenged both opt-outs, with the Oregon action newly filed and the Colorado case further along. A federal district court’s preliminary injunction against Colorado remains in effect pending review by the full 12-member Tenth Circuit.

The groups said even favorable results in both cases would not settle the issue nationally because rulings would apply only within the courts’ jurisdictions. They argued that litigation alone cannot supply a uniform national rule. With Oregon in the Ninth Circuit and Colorado before the Tenth Circuit, they warned that conflicting appellate rulings could compound conflicting state lending laws. They presented H.R. 7866 as the congressional route to nationwide parity and a defined limit on the opt-out provision.

American Fintech Council Chief Policy Officer Ian Moloney separately urged committee members to support the bill. He said DIDMCA has allowed state-chartered banks to compete with national banks and serve customers across state lines under a consistent federal framework. Moloney argued that state opt-outs would create an uneven competitive environment, reducing competition, limiting credit availability, and increasing costs for consumers and small businesses. He said the bill would clarify DIDMCA’s proper scope and protect competitive equity in the dual banking system.

The letter was signed by the American Bankers Association, America’s Credit Unions, American Financial Services Association, American Fintech Council, Association of Military Banks of America, Bank Policy Institute, Consumer Bankers Association, Defense Credit Union Counsel, Financial Technology Association, National Association of Industrial Bankers, National Bankers Association, and Online Lenders Alliance.

Companies: American Bankers Association; America’s Credit Unions; American Financial Services Association; American Fintech Council; Association of Military Banks of America; Bank Policy Institute; Conference of State Bank Supervisors; Consumer Bankers Association; Defense Credit Union Counsel; Financial Technology Association; National Association of Industrial Bankers; National Bankers Association; Online Lenders Alliance;

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