What Happened?
On April 7, 2026, Oregon Governor Tina Kotek signed into law Oregon HB 4116 which prohibits out-of-state FDIC insured, state-chartered banks from making consumer finance loans of $50,000 or less to Oregon borrowers using the banks’ home-state interest rates if those rates exceed Oregon’s 36% interest rate cap. According to the Oregon Legislative website, the law takes effect on June 5, 2026.
Why It Matters
In recent years, certain states (i.e., Illinois, New Mexico, Washington State, Maine, among others ) have adopted anti-evasion restrictions for marketplace lending arrangements and with notable exceptions, do not recognize the bank’s rate exportation authority if the interest rates of the loans originated in these partnerships exceed certain proscribed state usury caps. The new Oregon law follows this trend by opting Oregon out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), and expressly providing that state chartered banks must adhere to usury restrictions (36%) of “consumer finance loans”, namely secured and unsecured consumer loans in amounts of $50,000 or less. Congress enacted DIDMCA during a time of very high interest rates, and the statute aimed to improve competition between state and national banks by allowing interest rate “exportation” across state lines, though it permitted states to “opt out” of these preemption provisions.
The new law does not apply to national banks, however, who apparently are still able to preempt restrictions applicable to “consumer finance loans.” With an eye toward marketplace lending arrangements, the law applies to anyone originating, brokering and facilitating consumer loans to Oregon residents, whether by mail, telephone or the Internet.
What to Do Now
With the enactment of Oregon HR 4116, Oregon becomes the fourth jurisdiction to opt out of DIDMCA, following Puerto Rico, Iowa and Colorado. Notably, however, Colorado’s recent opt out of DIDMCA has been subject to a constitutional challenge in the Tenth Circuit Court of Appeals, which if ultimately successful, could jeopardize the enforceability of Oregon HR 4116. Further, there is pending federal legislation, the fate of which is uncertain, that would prohibit additional DIDMC opt-outs. Nevertheless, legislation has been introduced in other states that would either opt the state out of DIDMCA or would enact anti-evasion provisions that would disallow the exportation of interest rates exceeding the particular state limitations in a marketplace lending arrangement.