The Center for Responsible Lending (CRL) and the National Consumer Law Center (NCLC) filed an amicus brief supporting Colorado’s authority to enforce its interest-rate limits against out-of-state state-chartered banks and their non-bank lending partners when they make loans to Colorado residents. These arrangements, known as “rent-a-bank” schemes, can result in loans carrying rates approaching 200% APR.
The case, National Association of Industrial Bankers v. Weiser, concerns the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”). Section 521 of DIDMCA allows state-chartered banks to charge certain federally authorized rates or export the interest rate permitted by the state where the bank is located. Importantly, Congress also included an opt-out provision, Section 525, allowing states to reject that federal framework and restore their own interest-rate protections for loans made in the state.
Colorado exercised that right in 2023. The banks challenging Colorado’s law, however, contend that Section 525 permits only a partial opt-out—one that applies to state-chartered banks located in Colorado but does not prevent out-of-state state-chartered banks from exporting higher rates to Colorado borrowers. Read Colorado’s supplemental brief defending its authority to enforce its interest-rate limits.
CRL and NCLC’s brief explains that Colorado’s interpretation is the only one that gives full effect to the opt-out Congress enacted. The text, structure, and legislative history of DIDMCA demonstrate that when a state opts out, it may apply its interest-rate laws to loans made to borrowers in that state, regardless of where the bank is located.
Read CRL and NCLC's amicus brief.
As the brief explains, the banks’ interpretation would mean that “Another state’s rate policy could thus override the rate ceilings of Colorado and every other state, including those that opted out.” It would render Congress’s opt-out largely ineffective, leaving states unable to shield their own residents from loans they have determined are usurious.
Read additional amicus briefs supporting Colorado’s position and explaining the importance of preserving state authority over high-cost lending:
- States and the District of Columbia
- Former FDIC Board Members
- Former Iowa Attorney General Tom Miller
- Bell Policy Center
CRL and NCLC previously filed an amicus brief asking the Tenth Circuit to overturn the lower court’s decision, and a divided panel agreed before the full court decided to rehear the case.