On July 13 and July 15, a coalition of 11 states and the District of Columbia, followed by two former FDIC Board members, filed amicus briefs supporting Colorado in the en banc proceedings before the U.S. Court of Appeals for the Tenth Circuit in National Association of Industrial Bankers v. Weiser. The appeal concerns whether Colorado’s opt-out under Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) permits the state to apply its interest-rate limits to loans made to Colorado residents by out-of-state, state-chartered banks.
The Tenth Circuit granted rehearing en banc and vacated a divided panel decision holding that a loan is “made in” a state when either the lender or borrower is located there. The new briefs urge the court to adopt that interpretation and reverse the district court’s preliminary injunction.
The state amici brief, filed by California, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New York, Washington, and the District of Columbia, frames the dispute as one involving state sovereignty. The states argue that they have historically applied usury and consumer protection laws to transactions involving their residents, regardless of where a lender is located. In their view, limiting Section 525 to banks located within an opt-out state would substantially diminish the practical value of Congress’s decision to preserve state opt-out authority.
The brief filed by former FDIC officials focuses more closely on DIDMCA’s statutory language and the FDIC’s prior interpretations. Former FDIC Chairman Martin Gruenberg and former CFPB Director and FDIC Board Member Richard Cordray argue that Section 525’s reference to “loans made in” a state differs intentionally from Section 521’s reference to the state where a bank is “located.” They also contend that the FDIC’s current litigation position is inconsistent with earlier agency interpretations recognizing that distinction.
Both briefs further argue that any ambiguity should be resolved in favor of preserving state authority because regulation of usury has traditionally fallen within the states’ police powers.
Putting It Into Practice: The appeal presents a consequential question about the scope of DIDMCA’s state opt-out provision and where an interstate loan is considered “made.” The Tenth Circuit’s decision could have significant implications for mortgage lenders and other creditors that rely on federal rate-exportation principles when offering loans across state lines. Mortgage lenders should monitor the en banc proceedings and evaluate whether their state-law analyses, loan terms, and multistate compliance frameworks would remain appropriate under either outcome.