Banks, fintechs sue Oregon over interest rate opt-out law

• Key insight: Trade groups argue Oregon exceeded its authority by applying its 36% interest-rate cap to loans made by out-of-state state-chartered banks under their home states' laws.
• Supporting data: The lawsuit relies on the ongoing Colorado case, NAIB v. Weiser, which is being reheard en banc by the Tenth Circuit after a federal district court sided with industry plaintiffs and a divided appellate panel later reversed that ruling.
• Forward look: The Oregon case is the latest test of whether states can opt out of the Depository Institutions Deregulation and Monetary Control Act of 1980, which limits interest rates charged by out-of-state banks.

A group of financial trade groups filed a lawsuit in an Oregon Federal court attempting to block the Beaver State's House Bill 4116, which opts the state out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980. 
The National Association of Industrial Bankers, the American Financial Services Association and the Online Lenders Alliance argued in their June 15 lawsuit that the law is federally preempted because it regulates rates that banks chartered outside Oregon charge to Oregon consumers. They argue banks lending to Oregon consumers but not chartered there are technically subject to their home states' interest rate limits.

"Oregon is reinterpreting longstanding interstate banking rules that prohibited states from imposing their own restrictions on loans made by out-of-state banks," said Frank Pignanelli, Executive Director of the National Association of Industrial Bankers in a statement. "The irony is that restricting how credit is priced does not make it cheaper — just less available, especially for consumers who need it most."

The lawsuit adds fuel to a longstanding fight between industry groups, state regulators and federal banking agencies over the limits of federal law on state's ability to regulate consumer lending. Oregon enacted House Bill 4116 on June 5 to close what its Division of Financial Regulation described as "loophole that allowed internet lenders to charge interest rates in excess of Oregon's limit of 36% for consumer finance loans." A central issue is the legal concept of interest-rate exportation, which allows banks to charge the interest rates allowed under their home-state laws when lending to borrowers in states with stricter usury caps. 

The complaint argues that Oregon exceeded its authority with DIDMCA by attempting to apply its 36% interest-rate cap in place since 2007 — a rate widely regarded by consumer advocates as the inflection point between affordable small-dollar loans and potentially predatory loans — to loans made by banks under their home states' more lenient lending laws.

The groups' argument hinges on language in Section 525 of DIDMCA, which allows states to opt out of federal interest-rate exportation for loans "made in such State," which they argue refers to the state where the bank is located and performs its lending functions, not where the borrower takes out the loan. 

The plaintiffs cite a 2024 federal district court ruling in Colorado, NAIB v. Weiser, which held that loans are "made" where the lender is chartered, citing a decision in the case that interpreted the DIDMCA as such. The decision in NAIB v. Weiser is still pending, however, as a divided panel of the Tenth Circuit later reversed the District Court ruling. The Tenth Circuit later vacated the panel's decision and granted a hearing en banc — when all the active judges of an appellate court convene to reconsider a case. The en banc ruling has not yet been published. 

"Nobody thinks of themselves as 'making a loan' when they borrow money from a family member or put a charge on a credit card," the district judge wrote in NAIB v. Weiser, as cited by the groups. "Had Congress sought to put the focus on the borrower, as the State argues, it could have done so in many ways … allowing states to opt out as to loans 'made to borrowers in such State,' or … a borrower-focused word like 'accepted' or 'obtained' … instead, it put the focus on where a loan is 'made,' which puts the focus on the lender."

The complaint also cites amicus briefs filed by the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency in similar Colorado litigation the plaintiffs say support their view.

Interchange fees

Colorado Gov. vetoes law barring swipe fees on taxes

June 4, 2026 9:27 AM

By John Heltman

"Oregon now becomes one of only four jurisdictions that is currently opted-out of Section 521 of DIDMCA — the others are Colorado, lowa, and Puerto Rico," the plaintiffs Monday filing noted. "It is noteworthy that five other states — Maine, Massachusetts, Wisconsin, Nebraska, and North Carolina — originally opted-out but subsequently repealed their opt-outs because they realized that the opt-outs were harming their own state banks and consumers."

Plaintiffs say enforcement of the law would harm state-chartered banks by compelling them to lower interest rates and take on higher compliance costs which could drive them to narrow their offerings and potentially lose customers. The plaintiffs further argue that Oregon's law disadvantages state-chartered institutions because it leaves national banks eligible to uphold rates allowed under their home-state laws, since nationally chartered banks enjoy their rate exportation authority from the National Bank Act, not the DIDMCA.

"As we explained to policymakers during relevant hearings, Congress enacted DIDMCA to ensure state-chartered banks can compete on equal footing with national banks to expand access to responsible credit," the American Fintech Council, which says it supports the lawsuit, wrote in a press release. "Attempts to reinterpret this law will restrict responsible and affordable lending activity, reduce access to credit, limit consumer choice, and create uncertainty for the financial institutions that families and small businesses rely on every day."