Oregon Legislature Votes to Opt out of DIDMCA Interest Rate Export Provisions

Lawmakers in Oregon last week approved House Bill 4116—which opts the state out of a provision in the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA)— reinforcing the state’s 36 percent cap on consumer loan interest rates. The legislation does so by barring state-chartered banks in other states from “exporting” their home state interest rates to Oregon borrowers, particularly when those rates exceed Oregon’s 36 percent statutory cap.

Under existing federal law, state-chartered banks are generally permitted to charge interest rates allowed in their home state even when lending to borrowers located in states with stricter limits. Critics say some lenders have used bank partnerships to take advantage of this rule, allowing loans with significantly higher annual percentage rates to reach consumers in states that otherwise cap interest at lower levels.

The bill now heads to the desk of Gov. Tina Kotek, who is expected to sign it.

Fintech industry groups opposed the measure, arguing that the change could limit partnerships between banks and technology firms that help expand credit access and promote financial innovation. They also warned that the law could create uneven regulatory treatment, since national banks operate under the National Bank Act, which continues to allow interest rate exportation and is not subject to state opt-outs. Supporters, meanwhile, say the legislation closes a long-standing loophole that allows lenders to circumvent state usury laws.

Oregon joins Colorado, Iowa, and Puerto Rico in opting out of the federal provision, part of a broader trend of states revisiting interest rate export rules.