DIDMCA
National Association of Industrial Bankers v. O’Day
Date: July 24, 2026
Issue: Whether Oregon’s “rate opt-out law” violates the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA).
Case Summary: ABA filed a coalition amicus brief urging the U.S. District Court of Oregon to grant a preliminary injunction to prevent Oregon from enforcing its “rate opt-out law.”
DIDMCA authorized state-chartered banks to charge interest at a rate permissible in the state “where the bank is located.” At the same time, Congress allowed states to “opt out” from the preemptive effect of this provision, in part, by enacting a law that “states explicitly and by its terms that such State does not want this section to apply with respect to loans made in such State.” In April, Oregon enacted HB 4116 to exercise this opt-out authority.
On June 15, 2026, a coalition of trades (Plaintiffs) sued Oregon, alleging its rate opt-out law unlawfully applies Oregon’s 36% interest-rate cap to consumer finance loans made by out-of-state state banks. Plaintiffs argued that Section 521 of DIDMCA allows state-chartered banks to export the interest rates authorized by their home states and preempts conflicting state laws. Although DIDMCA permits states to opt out of that authority for their own banks, Plaintiffs claimed that Oregon exceeded its authority by regulating loans made by out-of-state banks. Plaintiffs also alleged that Oregon’s rate opt-out law violates the dormant Commerce Clause by applying Oregon law to loans made entirely outside the state. Plaintiffs seek a declaration that the rate opt-out law is invalid and an injunction barring Oregon from enforcing it against out-of-state state banks.
In its brief, ABA made three main arguments. First, ABA argued that DIDMCA’s text and context preclude Oregon’s overbroad opt-out because the statute allows a state to opt out of federal interest-rate exportation only for loans made by banks located in, or performing their key loan-making functions in, that state. ABA contended that DIDMCA’s plain text focuses on the lender who makes the loan, not the borrower who receives it, and that Congress reinforced this lender-focused approach by borrowing DIDMCA’s language from the National Bank Act, which likewise determines where a loan is made based on the location of the bank rather than the borrower. Further, ABA noted that other federal banking statutes consistently use the terms “make” and “made” to describe actions taken by banks, not borrowers, and that DIDMCA’s legislative history confirms Congress intended states to regulate only their own state-chartered banks through the opt-out provision. ABA also pointed to Congress’s use of the same “made in” language in another federal interest-rate parity statute, which courts have interpreted to mean the state where the bank performs its loan-making functions.
Second, ABA argued that Oregon’s broad interpretation of DIDMCA’s opt-out provision would undermine the nation’s dual banking system. ABA explained that Congress enacted DIDMCA to preserve competitive parity between state-chartered and national banks by allowing state banks to export the interest rates authorized by their home states. Oregon’s rate opt-out law disrupts that balance by allowing one state to regulate loans made by banks chartered in other states, overriding those states’ policy choices and eroding the parity Congress intended. ABA also noted that Oregon’s approach would place state-chartered banks at a competitive disadvantage because national banks could continue exporting their home-state interest rates under the National Bank Act. That disparity would encourage state-chartered banks to convert to national charters, weakening the dual banking system Congress sought to protect.
Finally, ABA asserted that Oregon’s rate opt-out law would not benefit consumers. ABA emphasized that Congress enacted DIDMCA’s opt-out provision to preserve states’ authority over their own state-chartered banks, not to protect consumers from high-interest loans. Oregon’s law would not eliminate higher-rate lending, as national banks could continue to export their home-state interest rates under the National Bank Act. Instead, ABA maintained that the law would reduce access to credit for higher-risk borrowers by making many loans uneconomical. At the same time, studies show that strict interest-rate caps reduce credit availability without improving delinquency rates. ABA also pointed to the experience of states that previously opted out of DIDMCA, many of which later reversed course, as evidence that broad opt-outs harm lending markets. Further, ABA stressed that Oregon’s law would ultimately reduce competition, encourage less efficient pricing practices, and increase borrowing costs for consumers with the fewest credit options.
Bottom Line: ABA urged the court to block Oregon’s rate opt-out law, arguing that DIDMCA allows states to opt out only for loans made by their own state-chartered banks, not loans made by out-of-state banks.
Document: Brief
