The United States Court of Appeals for the Tenth Circuit has held that a state that opts out of Section 1831d of the Depository Institutions Deregulation and Monetary Control Act’s (“DIDMCA”), 12 U.S.C. § 1831d, can impose their own usury laws on out of state banks that lend to in-state residents. National Association of Industrial Bankers v. Weiser.
The DIDMCA sets a national standard for interest rates — rates which preempt state laws that cap interest at lower rates — that apply to nationally chartered and state banks. The statute, however, allows states to opt out of the national rate standard for “loans made in such State.” A state which opts out reasserts its authority to regulate interest rates on any such loan.
In 2023, Colorado enacted a law opting the state out of the DIDMCA’s national interest rate, and reasserted Colorado’s own state law limits on interest for loans made in Colorado. Thereafter, trade groups filed suit, arguing that Colorado’s opt-out could only apply to loans made by banks located within the state, and not to loans made by out-of-state banks to borrowers in Colorado. The United States District Court for the District of Colorado agreed, finding that the term “made in” depends on where the lending bank is located, and in June 2024 issued a preliminary injunction. On appeal, the Tenth Circuit disagreed.
Ruling on an issue of first impression, the Tenth Circuit panel said the plain language of the statute supported the position that a loan is “made in” a state under the DIDMCA if either the lender or borrower is located in the state. This reading was bolstered by the fact that the preemption provision specifically referred to the location of the bank, whereas the opt-out provision contained no such limiting language. Accordingly, a state can fully reassert its historical authority to regulate interest rates made either by a bank located in the state or to a customer located in the state, thereby accomplishing the purpose of the opt-out provision.
Reaction to the Tenth Circuit’s decision has been mixed, with some consumer advocates praising the decision as supporting state sovereignty and allowing state policy decisions to protect residents from high-cost credit. Others, including several banking and other financial institution associations have criticized the decision as removing uniformity and upsetting longstanding banking regulations in a manner that could increase consumer borrowing costs. On February 12, 2026, Senator Bernie Moreno (R-OH) and Representative Warren Davidson (R-OH) introduced the “American Lending Fairness Act of 2026,” which would legislatively overturn the decision and preempt state regulation of interest rates charged by out-of-state institutions.
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DIDMCA, Usury, Opt-out, Loans, Interest