The Bell Policy Center’s amicus brief in National Association of Industrial Bankers v. Weiser leans on a number the Tenth Circuit can’t easily wave off: approximately 73%. That’s the share of Colorado voters who capped payday APRs at 36% via Proposition 111 in 2018. Five years later, the legislature opted the state out of DIDMCA Section 525’s interest-rate exportation rule.
That opt-out, H.B. 23-1229, is the statute now before the en banc court. The old yardstick, set by the district court, measured Section 525 by where the lending bank sits: an out-of-state bank could export its home rate into Colorado regardless of the borrower. Colorado’s read flips that to where the borrower sits. The en banc rehearing exists because that distinction decides who gets to charge triple-digit APRs on Colorado paychecks.
I’ve read enough of these “true lender” fights to recognize the pattern here. Colorado already burned years litigating Avant and Marlette Funding as true-lender cases before both settled in 2020. The Bell brief argues H.B. 23-1229 exists in part so the state doesn’t have to relitigate that fact-intensive slog every time a nonbank finds a new bank partner in a no-cap state.
The brief also leans on the FDIC’s 2020 rule preamble to argue a bank can be “located” in one state while “making loans” in another. That language was written for valid-when-made doctrine, not Section 525. Reading it as settled precedent here is thin ice.
Congress wrote Section 525 in 1980. That intent still governs, regardless of Colorado’s 2023 policy judgment. Worth reading the en banc briefing before your bank-fintech partnership crosses state lines this quarter.
Rebecca Lauren