Two lawmakers have introduced legislation to prevent states from imposing interest rate caps on loans from out-of-state chartered banks and credit unions.
Currently, states can opt out of the federal Depository Institutions Deregulation and Monetary Control Act, allowing them to establish restrictions on loans made by state-chartered banks. Colorado chose to opt out in 2024 and imposed restrictions on rates and fees on both state-chartered banks and banks chartered in other states. The restrictions were challenged in court, with the Tenth Circuit Court of Appeals last year siding with Colorado.
The American Lending Fairness Act by Sen. Bernie Moreno (R-Ohio) and Rep. Warren Davidson (R-Ohio) would prevent states from using the opt-out to impose interest rate caps on loans from out-of-state financial institutions. The bill will preserve states’ authority to regulate in-state chartered institutions, the sponsors said.
American Bankers Association President and CEO Rob Nichols said the bill would preserve the competitive parity that is an essential principle of the nation’s dual banking system.
“We appreciate their efforts to ensure state-chartered banks can compete on a level playing field with national banks, and we urge the House and Senate to move this bill forward,” Nichols said.
