Utah’s attorney general, joined by fourteen other states, filed an amicus brief yesterday backing a preliminary injunction motion against Oregon House Bill 4116. The underlying suit, brought by the National Association of Industrial Bankers, the Online Lenders Alliance and the American Financial Services Association, argues Oregon’s opt-out law is preempted by Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980.
The fight is over five words in DIDMCA’s opt-out clause: “loans made in such State.” Oregon reads that broadly enough to cap interest rates on loans from out-of-state banks whenever an Oregon resident is on the other end. Utah and its coalition say Congress never intended that, tracing the statute back to the Supreme Court’s 1978 ruling in Marquette National Bank v. First of Omaha, which fixed a loan’s location at the lender, not the borrower.
The same question is already pending before the Tenth Circuit sitting en banc, in a parallel Colorado case. That’s not a coincidence. A ruling for Oregon would open the door for every state to regulate interest rates on loans it never touched.
Oregon’s response to the injunction motion is due next, with the state’s own amicus support following before the case moves toward a hearing. Fifteen attorneys general have made their bet on where that’s headed.
James Okafor