Comptroller of the Currency Jonathan Gould today criticized a recent federal court decision leaving in place a Colorado law that caps interest rates and fees on loans to state residents, saying it puts state banks at a competitive disadvantage compared to their national counterparts.
In 2024, three financial technology sector associations sued Colorado after the state legislature passed a law opting out of the federal Depository Institutions Deregulation and Monetary Control Act, allowing the state to establish restrictions on loans made by state-chartered banks. Colorado argues that its restrictions on rates and fees apply not only to banks chartered in the state but those chartered in other states, which the plaintiffs contest.
The FDIC during the Biden administration sided with Colorado. The American Bankers Association joined other associations in supporting the lawsuit, saying the Colorado law created uncertainty for banks. A district court issued a preliminary injunction against enforcement of the law, but in a 2-1 decision last month, the Tenth Circuit Court of Appeals reversed the decision, with the majority arguing the plaintiffs were unlikely to succeed on the merits.
In a statement, Gould – who is a member of the FDIC board – contended that the Tenth Circuit was wrong to uphold the Colorado law.
“This decision risks undermining state banks’ ability to effectively administer multi-state lending programs and, perhaps more importantly, disadvantages state banks that wish to lend in Colorado compared to national banks and Federal savings associations,” Gould said. “Such an outcome is fundamentally inconsistent with Congress’s efforts to create competitive equality between state and federally chartered banks.
“Courts or, if necessary, Congress should remedy this outcome,” he added.
