Legal Alert

Mortgage Banking Update - June 18, 2026

June 18, 2026

June 18 – Read the newsletter below for the latest Mortgage Banking and Consumer Finance industry news, written by Ballard Spahr attorneys. In this issue, our lawyers examine Illinois’ new consumer complaint portal, how AI shopping bots are pushing retail legal boundaries, the FTC’s restraining order against a mortgage relief assistance operation, Colorado’s latest opt-out developments, and other notable updates.

Podcast Episode: Fireside Chat With Simon Taylor and Adam Maarec
Podcast Episode: Coerced Debt: New York’s Landmark Law and Emerging Trends Nationwide — Part 1
Ballard Spahr’s Consumer Financial Services Group Earns National Recognition Again from Chambers USA in 2026
CFPB Issues Guidance on Consideration of Immigration Status Based on Ability to Repay Requirements Without Providing Sufficient Detail to Assist Creditors
President Trump Nominates Brian Johnson to Lead CFPB: A Strong Choice, but Is There Another Reason for the Timing?
Banking Agencies Update Interagency Documents to Remove Reputational Risk References
CFPB to End Employee Telework
Amid Increased Complaints, Illinois Launches New Consumer Complaint Portal
Banking and Consumer Credit Trade Associations Challenge Oregon’s DIDMCA Opt-Out Law
Plaintiffs Tell 10th Circuit En Banc Court That Colorado’s Opt-Out Law Cannot Reach Loans Made by Out-of-State State-Chartered Banks
Banking Trade Groups Urge 10th Circuit to Reject Colorado’s Attempt to Apply Its Usury Laws to Interstate Loans Made by Out-of-State State Banks
OCC Files Amicus Brief Supporting Challenge to Colorado’s Opt-Out Law and Defending Longstanding Interest-Rate Exportation Principles
FDIC Files Amicus Brief Supporting Challenge to Colorado’s Opt-Out Interest Rate Law
21 States File Amicus Brief Supporting Challenge to Colorado’s Effort to Regulate Interest Rates Charged by Out-of-State State Banks
U.S. Chamber of Commerce Amicus Brief Urges 10th Circuit to Reject Presumption Against Preemption in Colorado DIDMCA Case
Prominent Consumer Credit Scholars and Center for Individual Freedom File Amicus Brief Supporting Plaintiffs in Colorado Opt-out Appeal
NCUA Issues Interim Final Rule Clarifying Federal Credit Union Authority to Charge Noninterest Fees and Preempt State Regulation
FTC Obtains Restraining Order Against Mortgage Relief Assistance Operation
Congress Takes Aim at AI: The Push for Federal AI Framework
Agent Provocateur: How AI Shopping Bots Are Testing Retail Legal Boundaries
Looking Ahead

All content can be found previously published on Ballard Spahr’s Insights page.

Podcast Episode: Fireside Chat With Simon Taylor and Adam Maarec

In this episode, Adam Maarec sits down with Fintech thought leader Simon Taylor for a lively fireside chat focused on the rapidly evolving world of Fintech, payments, and banking innovation. Adam, an experienced legal and regulatory advisor in financial services, and Simon, widely recognized for his writing, podcasts, and advisory work with Fintechs, banks, VCs, and regulators, delve into some of the most relevant challenges and opportunities shaping the industry today.

Together, they unpack the rise of agentic commerce and the impact of AI-driven financial tools, exploring how personal finance agents and large language models are beginning to reshape shopping, payments, and financial management. The conversation covers the complexities of liability and authentication when using AI agents, the evolving regulatory landscape in the U.S. compared to the UK and EU, and the ongoing battle with AML (Anti-Money Laundering) risks, particularly in relation to stablecoins and open banking. Listeners will hear candid takes on the tension between innovation and risk management, the evolving payments ecosystem (including A2A and stablecoins), and the real-world implications for merchants, consumers, and regulators as the industry pushes into new territory.

The episode also highlights real use cases and experiments currently unfolding in the market, such as the integration of platforms like Perplexity and Plaid for next-generation personal financial management, and the adoption of stablecoins in B2B payments across global markets. Adam and Simon provide a balanced view, separating hype from genuine progress, and invite listeners to stay attuned to the early signals that are likely to shape the future of digital finance.

Consumer Finance Monitor is hosted by Alan Kaplinsky, senior counsel at Ballard Spahr, and the founder and former chair of the firm’s Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.

To listen to this episode, click here.

Consumer Financial Services Group

Podcast Episode: Coerced Debt: New York’s Landmark Law and Emerging Trends Nationwide — Part 1

We recently produced a 90-minute webinar in which we explored one of the most important and rapidly developing issues in consumer financial services law: coerced debt and the emerging legislative efforts designed to address it. The webinar has been re-purposed into a two-part podcast series, both releasing in June.Alan Kaplinsky, Founder, former Chair for 25 years and now senior counsel of the Consumer Financial Services Group at Ballard Spahr, LLP hosted and moderated the first discussion.

The discussion examines the growing recognition that individuals, often survivors of domestic violence, elder abuse, human trafficking, or other forms of coercive control, can be manipulated, threatened, or deceived into incurring debt without meaningful consent. The program focuses in particular on New York’s newly enacted coerced debt statute, which creates a framework allowing consumers to challenge the enforceability of debts incurred through coercion and requires creditors and debt collectors to investigate such claims.

The episodes feature an outstanding panel of experts from academia, legal services organizations, consumer advocacy groups, and private practice. Professor Angela Littwin of the University of Texas School of Law discusses her groundbreaking research on coerced debt, including empirical studies demonstrating the prevalence of the problem and the inadequacy of traditional legal remedies such as divorce proceedings, bankruptcy, and fraud defenses. Representatives from CAMBA Legal Services, Brooklyn, New York, Divya Subrahmanyam and Naomi Young, explain how the New York statute is intended to operate in practice, including the evidentiary requirements imposed on survivors, creditor obligations upon receipt of a coerced debt claim, and the practical challenges survivors face in seeking relief.

The program also examines the broader national landscape. Carla Sanchez-Adams of the National Consumer Law Center discusses similar legislative initiatives developing across the country, including laws enacted in states such as California, Texas, Connecticut, Minnesota, Maine, Illinois, and Vermont, as well as pending legislation elsewhere. Carla and the panel further analyze the interaction between coerced debt claims and existing federal laws such as the Fair Credit Reporting Act and Truth in Lending Act, while also addressing ongoing efforts to expand federal protections.

Finally, Ballard Spahr attorney, Dan Wilkinson, offers an industry perspective on the significant operational and compliance issues created by these laws for banks, finance companies, debt collectors, and other financial institutions. The discussion highlights the challenges of identifying coerced debt claims, conducting investigations while protecting survivor confidentiality, training frontline personnel, and balancing consumer protection concerns with fraud prevention and risk management obligations.

This podcast and the one we are releasing next week provide a comprehensive and balanced examination of a fast-evolving area of consumer finance law that is likely to have substantial implications for creditors, debt collectors, compliance professionals, consumer advocates, and policymakers nationwide.

Part 1 of this discussion includes an introduction to the topic and the speakers by Alan Kaplinsky, an overview of coerced debt by Angela Littwin, and the analysis of the New York statute by Divya Subrahmanyam and Naomi Young.

Part 2 of the discussion, will cover theories of liability under existing federal and state laws and bills pending in other states by Carla Sanchez-Adams, the Industry Perspective by Dan Wilkinson, and the key takeaways and closing by Alan Kaplinsky.

To listen to this episode, click here.

Consumer Financial Services Group

Ballard Spahr’s Consumer Financial Services Group Earns National Recognition Again from Chambers USA in 2026

We are pleased to announce that Ballard Spahr’s Consumer Financial Services Group has once again been recognized by Chambers USA: America’s Leading Lawyers for Business in all three nationwide consumer finance categories: Compliance, Enforcement & Investigations, and Litigation.

Since Chambers first established these nationwide consumer finance rankings, our Consumer Financial Services Group has been ranked in each category every year. No other law firm in the country has achieved this distinction.

What Chambers Says About Our Group

Chambers described the Group as follows:

“Ballard Spahr LLP is an esteemed group noted for its work with banks and non-banks on the full spread of consumer finance regulatory matters, including credit card, mortgage and auto finance issues. Harbors expertise pertaining to Fintech areas such as telemarketing, e-commerce and prepaid cards. Provides robust representation in CFPB enforcement actions, arbitrations and litigation. Capable of supporting clients at both state and federal regulatory levels.”

What Our Clients Say About Our Group

Chambers also reported the following comments from our clients:

“Ballard handled complex business and legal issues very well.”

“They have talented partners all over the country.”

“They assess the risks and relative costs of litigation well, as well as potential resolutions and exit strategies.”

“They have done a great job of getting into the weeds of our business practices and giving us actionable advice to mitigate risk.”

“The team is capable of handling matters with massive potential liability and getting outstanding results for their clients.”

Lawyers Ranked by Chambers USA in 2026

The following six lawyers in our Consumer Financial Services Group were individually ranked this year (listed alphabetically):

Richard J. Andreano, Jr., Practice Group Leader of the Mortgage Banking Group

Financial Services Regulation: Consumer Finance – Compliance (Nationwide)
Financial Services Regulation: Consumer Finance – Enforcement & Investigations (Nationwide)

Thomas Burke

Financial Services Regulation: Consumer Finance – Litigation (Nationwide)

John L. Culhane, Jr.

Financial Services Regulation: Consumer Finance – Compliance (Nationwide)
Financial Services Regulation: Consumer Finance – Enforcement & Investigations (Nationwide)
Banking & Finance: Mainly Regulatory (Pennsylvania)

Alan S. Kaplinsky, Founder and former Practice Group Leader of the Consumer Financial Services Group and host of the Group’s weekly podcast, Consumer Finance Monitor

Financial Services Regulation: Consumer Finance – Compliance (Nationwide)
Financial Services Regulation: Consumer Finance – Enforcement & Investigations (Nationwide)
Banking & Finance: Mainly Regulatory (Pennsylvania)

Daniel JT McKenna, Co-Practice Group Leader of the Consumer Financial Services Group

Financial Services Regulation: Consumer Finance – Litigation (Nationwide)

John D. Socknat, Co-Practice Group Leader of the Consumer Financial Services Group

Financial Services Regulation: Consumer Finance – Compliance (Nationwide)

We are extremely proud of the work our lawyers do on behalf of clients across the consumer financial services industry. We are also deeply grateful to our clients for placing their trust in us to help them develop innovative products and services, defend them in private litigation and government enforcement matters, and navigate the increasingly complex landscape of federal and state consumer financial services laws and regulations.

Consumer Financial Services Group

CFPB Issues Guidance on Consideration of Immigration Status Based on Ability to Repay Requirements Without Providing Sufficient Detail to Assist Creditors

When the CFPB and Department of Justice withdrew a joint statement on the consideration of immigration status under the Equal Credit Opportunity Act in January 2026, we pointed out that “the agencies could have, but did not, [seek] to reduce compliance burdens by providing helpful guidance on how creditors may appropriately consider an applicant’s immigration status under ECOA. For example, it would be helpful to receive guidance on the consideration of an applicant’s immigration status in assessing the likelihood of continuation of income in the context of specific ability to repay determination requirements, particularly the requirements of the Regulation Z ability to repay rules for credit cards and for mortgage loans.”

The CFPB has now issued guidance on the consideration of immigration status in connection with the Regulation Z ability to repay requirements for credit cards and mortgage loans. Unfortunately, the guidance falls short of providing guideposts and will likely prove to be more problematic than helpful.

Regulation Z credit card provisions include the requirement that a “card issuer must not open a credit card account for a consumer under an open-end (not home-secured) consumer credit plan, or increase any credit limit applicable to such account, unless the card issuer considers the consumer’s ability to make the required minimum periodic payments under the terms of the account based on the consumer’s income or assets and the consumer’s current obligations.” Similarly, Regulation Z residential mortgage loan provisions include the general requirement that a “creditor shall not make a loan that is a covered transaction unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms.” One element of the determination required for credit cards and mortgages is that the creditor must consider the consumer’s current or reasonably expected income or assets. The qualified mortgage provisions of the ability to repay requirements also require that a creditor consider the consumer’s current or reasonably expected income or assets.

The guidance notes the credit card and general residential mortgage ability to repay and income consideration requirements, as well as the Regulation B authority for creditors to consider an applicant’s immigration status. The CFPB then advises that it is issuing the “guidance to remind creditors that, when determining repayment ability, creditors relying on an individual’s income derived from U.S.-based employment are permitted—and may, under certain facts and circumstances, be obligated—to consider information that bears on the consumer’s underlying and continuing ability to earn income—when residency in the United States is a necessary component of such employment. Where a change ‘cannot be reasonably anticipated’ from the application and relevant records, the change need not be considered.” The CFPB then states that the “obligation arises if documentation in the consumer’s application or other records indicates that the consumer’s repayment ability will change on account of their immigration status.”

The guidance moves on to address situations in which an applicant is not lawfully within the United States:

“[A] creditor’s awareness of a consumer’s immigration status may implicate a creditor’s reasonable expectations about whether a consumer’s income from U.S.-based employment will remain available for repayment. For example, a creditor may regard a credit applicant who is neither lawfully present nor permitted to work in the United States as being subject to removal, in light of the Administration’s stated policy of removing any person unlawfully present in the United States. Indications that an individual may not be lawfully present, and therefore may be at risk of removal, may come from various sources, including direct inquiry or the consumer’s reliance on atypical identification methods, such as an Individual Taxpayer Identification Number (ITIN), typically issued to taxpayers to individuals who lack proof of legal residency.

To the extent a creditor’s information regarding the borrower’s immigration status indicates that the borrower may be an unlawfully present individual and removed from the United States, there is a danger that removal would render any such borrower unable to earn income derived from employment that requires physical presence in the United States. Accordingly, considering whether information regarding an applicant’s immigration status indicates a reasonably expected change in future income is a matter of sound compliance practice. The Bureau expects compliance with the law and failure to account for such a reasonably expected change in income may not comply with a creditor’s obligation to reasonably assess a borrower’s ability to repay the loan or line of credit sought.” (Footnote omitted.)

Unfortunately, the guidance then punts on providing specific guideposts for lenders:

“Of course, there are a wide variety of lawful immigration statuses in the United States. Assessing how each status might bear on a lender’s reasonable expectation that a consumer has the ability to repay an obligation with U.S.-based employment income is varied, and it cannot be assumed that consumers with different lawful statuses have identical abilities to repay. Accordingly, the Bureau cannot, and does not, provide a comprehensive analysis of variations in immigration status and the consequent reasonable expectations as to a consumer’s ability to repay a loan through expected income from U.S.-based employment. Rather, the Bureau reminds creditors when future changes in borrower income must be considered under Regulation Z. Regulation Z enables lenders to make these judgments by affirming their ability to lawfully consider the consumer’s immigration status, lawful presence, authorization to work, and other factors that may indicate risk of removal insofar as it bears on their current or reasonably expected income from U.S.-based employment.” (Footnote omitted.)

When the CFPB withdrew 67 guidance documents in May 2025, it stated that “it is the Bureau’s current policy to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased.” The immigration status guidance represents a departure from this policy. The guidance warns creditors of the risk of not complying with ability to repay requirements by not considering immigration status, particularly the status of an applicant not lawfully within the country, but fails to provide detail on situations in which a creditor would need to decline an application because of immigration status. The guidance, thus, increases the compliance burden of creditors. In particular, it appears that creditors may need to become experts in immigration law or engage counsel with such expertise.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

President Trump Nominates Brian Johnson to Lead CFPB: A Strong Choice, but Is There Another Reason for the Timing?

President Trump has nominated Brian Johnson for a five year term to serve as Director of the Consumer Financial Protection Bureau (CFPB). Johnson is the third nomination President Trump has made to fill the position. The first two nominations were Jonathan McKiernan and Stuart Levenbach. Perhaps, the third time will be a charm.

From a qualifications standpoint, Johnson appears to be an exceptionally strong choice. He is no stranger to the CFPB, having previously served in senior leadership positions at the Bureau from December 2017 until March 2020, including as Acting Deputy and then Deputy Director for a majority of that period. He has also served in a key policy and legal role on Capitol Hill as Chief Financial Institutions Counsel of the House Financial Services Committee for more than five years. After leaving the CFPB, he was a partner at a major law firm for more than two years before becoming Managing Director of Patomak Global Partners (a strategy, risk management, and compliance financial services consulting firm) for about two years. He then joined Capital One in November 2024 as Vice President, U.S. Card Compliance Officer. As a result of all these positions, he developed extensive expertise in consumer financial services law, financial regulation, and administrative law.

The nomination nevertheless raises an interesting legal and procedural question.

Some observers have suggested that the nomination was intended primarily to extend Vought’s tenure as Acting Director under the Federal Vacancies Reform Act (FVRA). A closer examination of the timeline suggests otherwise.

The CFPB Director position became vacant earlier in President Trump’s term. The Administration first nominated Jonathan McKernan to serve as CFPB Director. After McKernan was nominated for another position and his CFPB nomination was withdrawn, the Administration nominated Stuart Levenbach. When the Senate returned Levenbach’s nomination to the President on January 3, 2026, that action triggered what many observers viewed as the final 210-day acting-service period available under the FVRA.

Under that interpretation of the statute, Vought’s authority to serve as Acting Director expires on or about August 1, 2026. If that view is correct, Johnson’s nomination does not extend Vought’s tenure beyond that date.

Instead, the nomination may have significance because of the Consumer Financial Protection Act’s separate succession provision. The Consumer Financial Protection Act (CFPA) provides that the CFPB’s Deputy Director serves as Acting Director in the absence or unavailability of the Director. Accordingly, once Vought’s FVRA authority expires, CFPB Chief Legal Officer Mark Paoletta, who is currently also serving as Acting Deputy Director, could automatically become Acting Director under the CFPA.

If Paoletta succeeds Vought as Acting Director on August 1, 2026 under the CFPA, Johnson’s pending nomination could permit Paoletta to remain in that position while the Senate considers the nomination. In that scenario, Johnson’s nomination would not be extending Vought’s tenure at all. Rather, it would facilitate a seamless transition from Vought to Paoletta while preserving continuity in the Bureau’s leadership.

That possibility may help explain the timing of the nomination. The Administration submitted Johnson’s nomination approximately seven weeks before the anticipated expiration of Vought’s FVRA authority as Acting Director expires. If the goal were simply to keep Vought in office, the nomination would not seem to accomplish that objective. If, however, the goal is to ensure that a Senate-confirmed Director is eventually installed while maintaining a leadership structure aligned with the Administration’s policy objectives, the nomination makes considerably more sense.

The more difficult question concerns what happens if Johnson’s nomination ultimately fails.

Suppose, for example, that the Senate takes no action and returns the nomination to the President at the end of the current session in early January 2027. Would Paoletta’s authority as Acting Director immediately terminate? Would another acting-service period of 210 days become available? Or would the CFPA’s succession provision continue to operate independently of the FVRA so that Paoletta would indefinitely remain as Acting Director Intel President Trump nominates yet another candidate to be Director of the Bureau.

Those questions are not free from doubt, and there is surprisingly little judicial guidance addressing the interaction between the CFPA’s succession provision and the FVRA in these circumstances.

Our opinion is that Johnson’s nomination is for real and that it was not made just to enable Paoletta to become Acting Director. Knowing Johnson as we do, we very much doubt that he would allow himself to be used in that fashion.

Alan S. Kaplinsky and Adam Maarec

Banking Agencies Update Interagency Documents to Remove Reputational Risk References

The Federal Reserve Board, FDIC, and OCC have jointly updated interagency documents to delete references to reputational risk.

The agencies took this action to complement their earlier actions to end the use of reputational risk in supervision.

“As the agencies have previously noted, reputation risk can be misused by supervisors as a basis to encourage or pressure a bank to restrict individuals’ and legal businesses’ access to financial services due to their constitutionally protected political or religious beliefs, speech, or conduct or lawful business activities,” the agencies said, in a joint statement. “These updates help ensure supervisory decisions are based on material financial risks, as well as increase clarity and facilitate greater precision in supervisory decision making. The updates to interagency documents are limited to removing references to reputation risk.”

The agencies said they continue to review their supervisory materials and may update additional documents as appropriate.

In response to President Trump’s August 7 Executive Order, “Guaranteeing Fair Banking for All Americans,” the FDIC and the OCC have approved the joint publication of a Notice of Proposed Rulemaking that would codify the removal of reputational risk from their supervisory programs. The NCUA has taken a similar action, and the Federal Reserve Board announced the elimination of reputational risk as a component of examination programs in its supervision of banks.

Consumer Financial Services Group

CFPB to End Employee Telework

The CFPB is ending telework—a move that requires 1,100 employees to report to work five days a week to a new headquarters in Washington, D.C., The American Banker reported.

The publication reported that the Bureau’s Chief Operating Officer, Adam Martinez, said in a memo that employees will begin moving to the new headquarters at 445 12^th St. N.W. in Washington on June 1. The building is the former headquarters of the Federal Communications Commission and the current headquarters of the Pension Benefit Guaranty Corporation.

The decision to end telework includes 450 employees who live outside the Washington, D.C. area; the CFPB is terminating leases on all four of its regional offices, according to The American Banker.

Reportedly, Martinez’s memo calls for senior agency leadership and supervisors to report to the new headquarters on July 6. All D.C. area staff will be expected to report on July 13. Employees across the country will be expected to report on August 31.

The American Banker said the memo states that any exemptions will be reserved for “hard to fill” roles that are critical to the Bureau agenda.

The memo comes as the CFPB is locked in legal battles over its plan to downsize the agency.

One case arises from actions taken by Acting CFPB Director Russell Vought in early 2025 that halted much of the Bureau’s activity and set in motion substantial reductions in force. The National Treasury Employees Union (NTEU), representing CFPB employees, challenged those actions, arguing that they amounted to a de facto dismantling of the agency in contravention of Congress’s mandate in the Dodd-Frank Act.

The district court entered a preliminary injunction blocking broad layoffs. A divided three-judge panel of the D.C. Circuit later reversed the decision, reasoning in part that the plaintiffs had not identified a reviewable “final agency action” and that employment disputes should proceed through the Civil Service Reform Act’s administrative framework, while keeping the injunction in place. The full court subsequently granted rehearing en banc without lifting the injunction.

No decision has been issued in that case, but the Bureau did submit a workforce reduction plan to the D.C. Circuit. That plan calls for 556 employees, a figure more or less consistent with the new headquarters’ space, which apparently can accommodate 550 employees.

Consumer Financial Services Group

Amid Increased Complaints, Illinois Launches New Consumer Complaint Portal

Citing federal cutbacks in consumer protection and an increase in consumer complaints, the Illinois Department of Financial and Professional Regulation (IDFPR) has launched a new online submission option intended to modernize and simplify the manner in which Illinois consumers file complaints.

The new portal will accept complaints that will be directed to the Division of Banking (DOB) as well as complaints that will be directed to the Division of Financial Institutions (DFI). State officials said it creates a unified and more accessible complaint process for Illinois residents.

“Consumer voices help us identify issues early so we can protect Illinois residents,” said IDFPR Secretary Mario Treto, Jr. added that “[m]odernizing our complaint process with a clear, online submission portal strengthens our ability to serve the public. These improvements are especially important as complaints continue to rise nationally and federal resolutions decline.”

State officials said the launch comes as there is a significant increase in consumer financial complaints across the country. They said that the CFPB reported that total complaints to the agency more than doubled from 2.7 million in 2024 to 5.6 million in 2025.

They said that Illinois complaints to the Bureau followed a similar trend. Illinois consumers submitted 224,000 complaints to the CFPB in 2025. That represents an increase of more than 120,000 from 2024.

“According to state officials, “Many of these complaints involve industries regulated by DOB and DFI, including debt collection, money transmitters, and mortgage originators.”

IDFPR’s Divisions of Financial Institutions and Banking regulate credit unions, debt collectors, consumer installment lenders, and money transmitters and enforce the 36% APR cap under the 2021 Predatory Loan Prevention Act.

DOB regulates state-chartered banks, student loan servicers, mortgage lenders and pawnbrokers.

DFI regulates state-chartered credit unions, non-depositories, including payday and title lenders, debt collectors, and providers of specialized financial services, including currency exchanges and debt management companies.

“By improving the complaint submission process, IDFPR aims to enhance its ability to identify industry issues, support voluntary mediation, and protect consumers in an increasingly complex financial environment,” state officials said.

Francisco Menchaca, Director of IDFPR’s Division of Financial Institutions, emphasized, “We want to help. If you have an issue with an entity, even if you’re not sure if they’re regulated by IDFPR, let us know.”

Consumer Financial Services Group

Banking and Consumer Credit Trade Associations Challenge Oregon’s DIDMCA Opt-Out Law

Three leading financial services trade associations (the National Association of Industrial Bankers (NAIB), the Online Lenders Alliance (OLA), and the American Financial Services Association (AFSA)) have just filed a lawsuit in Federal District Court in the District of Oregon challenging a recently enacted Oregon law effective June 5, 2026, that seeks to impose Oregon’s 36% interest-rate cap on consumer finance loans made by out-of-state state-chartered banks in their home states to Oregon residents.

The lawsuit contends that Oregon House Bill 4116 is preempted by federal banking law and, in part, violates the dormant Commerce Clause of the U.S. Constitution.

The plaintiffs are represented by our law firm (Pilar French in our Portland, Oregon office and Burt Rublin, Alan Kaplinsky, and Facundo Bouzat, who are in the Philadelphia office).

Background

The dispute centers on Oregon’s enactment of House Bill 4116. The legislation amends Oregon’s Consumer Finance Act and includes two significant provisions.

First, Oregon exercised its right under Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) to “opt out” of Section 521 of DIDMCA. Section 521 generally permits state-chartered banks to charge interest at rates authorized by the laws of the state where the bank is located and to “export” those rates when making loans to borrowers in other states.

Second, and more controversially, Oregon went further by attempting to apply its Consumer Finance Act and its 36% annual interest-rate ceiling to consumer finance loans of $50,000 or less made by out-of-state state-chartered banks in their home states to Oregon residents.

The complaint argues that Oregon’s law is one of the most aggressive state efforts to date to restrict interstate lending by state-chartered banks.

The Federal Preemption Claim

The plaintiffs contend that Oregon exceeded the authority granted to states under Section 525 of DIDMCA.

According to the complaint, Section 521 of DIDMCA authorizes state-chartered banks to charge interest permitted by the laws of the state where the bank is located and expressly preempts conflicting state interest-rate limitations in the borrower’s state. The trade associations argue that a state’s opt-out authority under Section 525 extends only to loans “made in” that state by its own state banks and does not permit a state to regulate loans made by state banks located in other states to Oregon residents.

The complaint relies heavily on the federal district court’s decision in National Association of Industrial Bankers v. Weiser which held that, for purposes of DIDMCA, a loan is “made” where the bank is located and performs its lending functions, not where the borrower resides. Although a divided panel of the 10th Circuit subsequently reversed that decision, the panel ruling was vacated when the court granted rehearing en banc and the appeal remains pending. We recently blogged about the opening supplemental brief filed by the plaintiff trade associations (which includes 2 of the 3 plaintiffs in the newly filed Oregon case) and 6 amici supporting the plaintiffs. Among the 6 amici briefs that were filed, one was submitted by the FDIC and the other was submitted by the OCC. The authors of this blog submitted an amicus brief on behalf of the American Bankers Association, Consumer Bankers Association, Bank Policy Institute, 50 state bankers associations and America’s Credit Unions.

The plaintiffs argue that Oregon’s law improperly attempts to regulate loans made by out-of-state state banks in their home states in conformity with their home states’ laws and therefore conflicts with Section 521’s express preemption provision.

Dormant Commerce Clause Challenge

The complaint also advances a separate constitutional challenge to a portion of the Oregon statute.

Specifically, the plaintiffs challenge a provision that applies Oregon law whenever an Oregon resident makes payments on a consumer finance loan from an Oregon bank account or through an Oregon financial institution, even if both the bank and the borrower were physically located outside Oregon when the loan was made.

According to the complaint, this provision regulates conduct occurring wholly outside Oregon’s borders and therefore violates the dormant Commerce Clause under Supreme Court precedents such as Healy v. Beer Institute, 491 U.S. 324 (1989)and Ninth Circuit decisions invalidating extraterritorial state regulation.

Practical Impact on State-Chartered Banks

The trade associations allege that their members already are incurring significant compliance costs as a result of the new law. They further contend that enforcement of the statute has forced many state-chartered banks to reduce lending activity in Oregon, curtail relationships with retail and Fintech partners, and withdraw credit products from high-risk borrowers residing in Oregon.

The complaint also emphasizes what has become a recurring theme in litigation involving state opt-out statutes: the alleged competitive imbalance between state-chartered banks and national banks. Because national banks derive their interest-rate exportation authority from Section 85 of the National Bank Act rather than DIDMCA, Oregon’s law will not affect their ability to charge rates authorized by their home states to Oregon borrowers. Plaintiffs allege that the Oregon law is contrary to the express purpose of Section 521 of DIDMCA, which was to create parity between state-chartered depository institutions and national banks.

The plaintiffs argue that the law disadvantages state-chartered banks while providing little practical benefit to consumers because national banks remain free to export their home states’ rates under federal law, and the national banks will face less competition from state banks because of the law.

Why This Case Matters

The Oregon lawsuit is the latest chapter in the ongoing national debate over the scope of DIDMCA’s opt-out provision and the ability of states to regulate loans made by out-of-state state-chartered banks.

Oregon joins a handful of jurisdictions (Iowa, Colorado, and Puerto Rico) that currently maintain DIDMCA opt-outs, and the litigation comes against the backdrop of the closely watched Weiser case pending before the 10th Circuit sitting en banc. The Oregon case will provide another federal court with an opportunity to address a question that has become increasingly important as bank-Fintech partnerships and interstate digital lending continue to expand: where is a loan “made” for purposes of Section 525 of DIDMCA, and how far may an opt-out state go in restricting interstate lending activity?

The answer will have significant implications not only for state-chartered banks but also for Fintech companies, retailers, and consumers who rely on bank-partnership lending models. Depending on the outcome, the litigation could help define the limits of state authority over interstate lending for years to come.

Alan S. Kaplinsky and Burt M. Rublin

Plaintiffs Tell 10th Circuit En Banc Court That Colorado’s Opt-Out Law Cannot Reach Loans Made by Out-of-State State-Chartered Banks

The plaintiffs-appellees in National Association of Industrial Bankers v. Weiser have filed their supplemental en banc brief in the 10th Circuit, urging the full court to reject the panel majority’s interpretation of Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) and affirm the district court’s preliminary injunction against Colorado’s opt-out statute.

The brief responds to six questions posed by the en banc court and advances a straightforward proposition: under DIDMCA, a state may opt out of Section 521 federal interest-rate and exportation authority only with respect to loans made by state banks located in the opt-out state. Colorado therefore may regulate loans made by Colorado-chartered banks, but it may not apply its interest-rate restrictions to loans made by state-chartered banks located in other states.

Plaintiffs Frame the Case as One About Competitive Equality

The plaintiffs begin by emphasizing DIDMCA’s core purpose. Congress enacted Section 521 of DIDMCA to place FDIC-insured state-chartered banks on equal competitive footing with national banks. Prior to DIDMCA, national banks enjoyed the right under Section 85 of the National Bank Act to charge either their home state interest rates or 1% above the Federal Reserve discount rate, whichever was higher. Section 521 of DIDMCA extended comparable authority to state-chartered banks.

According to the plaintiffs, Colorado’s interpretation would effectively eliminate that parity. National banks would remain free to lend to Colorado borrowers at rates authorized by their home states, while out-of-state state-chartered banks would be subject to Colorado’s usury restrictions. The plaintiffs argue that Congress enacted DIDMCA specifically to avoid such disparate treatment.

“Loans Made” Does Not Mean “Loans Executed”

One of the principal issues before the en banc court concerns the meaning of the phrase “loans made in such State” in Section 525, DIDMCA’s opt-out provision.

The plaintiffs argue that the panel majority incorrectly transformed the phrase “loans made” into “loans executed.” According to the brief, Congress never used the term “executed” in Section 525, unlike a different banking statute amending the National Housing Act enacted by the same Congress three months earlier that allowed a state to override preemption with respect to a mortgage loan “made or executed” in that state. Plaintiffs argue that “Congress’s decision not to use the word ‘executed’ in Section 525 shows that the majority erred by reading that word into the statute.”

Instead, the plaintiffs contend that a loan is made where the bank performs the key lending activities that create the loan relationship, culminating in the disbursement of funds. In their view, the majority improperly shifted the analysis from the lender’s actions to the location of either party to the transaction.

The plaintiffs maintain that Section 525 focuses on the bank that makes the loan, not on where the borrower resides. The district court reasoned that only lenders (in this case, the bank) make loans. Borrowers do not make loans. Borrowers only obtain or receive loans. That was the principle basis upon which the district court enjoined the Colorado Attorney General from enforcing the Colorado opt-out statute. This injunction remains in effect today.

Section 521 and Section 525 Must Be Read Together

The plaintiffs also argue that the panel majority improperly interpreted Sections 521 and 525 as though they operate independently.

Section 521 authorizes a state-chartered bank to charge interest at the rate permitted by the state where the bank is located. Section 525 permits a state to opt out of that regime with respect to “loans made in such State.”

According to the plaintiffs, the two provisions should be interpreted consistently. If Section 521 focuses on the location of the bank, then Section 525’s reference to “loans made in such State” likewise should be understood as referring to loans made by banks located in that state.

The plaintiffs argue that the majority’s interpretation creates an unwarranted disconnect between the two provisions and effectively rewrites the statute.

Legislative History Supports a Lender-Focused Reading

The plaintiffs devote substantial attention to DIDMCA’s legislative history.

They contend that Congress used similar “loans made” language in a series of federal interest-rate preemption statutes enacted during the 1970s and early 1980s. In each instance, Congress focused on the location of the lender rather than the location of the borrower.

According to the plaintiffs, none of these statutes was designed to allow one state to dictate the interest rates that state banks chartered in other states could charge. Rather, Congress sought to address competitive disparities among financial institutions while preserving a uniform framework for interstate lending.

The plaintiffs therefore argue that Colorado’s interpretation is inconsistent with the broader statutory framework from which DIDMCA emerged.

Regulatory Guidance Supports the District Court’s Interpretation

The brief also relies heavily on decades of federal regulatory guidance.

According to the plaintiffs, both the FDIC and the OCC have long treated the location of a bank’s loan-making functions as the determining factor in identifying where a loan is made. The relevant inquiry focuses on where the bank performs key non-ministerial lending activities, such as approving credit, communicating lending decisions, and disbursing funds.

The plaintiffs contend that this longstanding regulatory approach confirms that the borrower’s location is not determinative and that the district court correctly relied on that body of guidance when issuing the preliminary injunction.

Notably, these arguments now align with the positions recently advanced by both the FDIC and the OCC in their own amicus briefs supporting the plaintiffs.

The Statute Is Not Ambiguous

The plaintiffs also reject the notion that Section 525 is ambiguous.

They argue that the text, statutory context, purpose, legislative history, and regulatory interpretations all point to a single conclusion: “loans made in such State” refers to loans made by banks located in the opt-out state.

Because the plaintiffs view the statute as unambiguous, they contend there is no basis for adopting Colorado’s broader interpretation.

No Presumption Against Preemption Applies

Finally, the plaintiffs challenge the panel majority’s reliance on a presumption against preemption.

The brief emphasizes that Section 521 of DIDMCA contains an express preemption provision. When Congress expressly preempts state law, courts do not apply a presumption against preemption or require a heightened clear-statement rule.

The plaintiffs therefore argue that the majority erred by resolving perceived ambiguity in favor of state regulation rather than applying the statute’s express language.

Plaintiffs’ Strong Amicus Support in 10th Circuit

The plaintiff trade associations received substantial support from a broad and diverse group of amici on June 4, 2026. The amicus filings underscore the far-reaching implications of the case for the banking system, federal banking regulation, interstate lending, and consumer access to credit.

The following amici filed briefs in support of the plaintiffs:

The Federal Deposit Insurance Corporation (FDIC);
The Office of the Comptroller of the Currency (OCC);
The American Bankers Association, Consumer Bankers Association, Bank Policy Institute, America’s Credit Unions, and fifty state bankers associations;
21 state Attorneys General;
Professors Todd Zywicki and Thomas Miller, Jr. and Center for Individual Freedom; and
The United States Chamber of Commerce.

The breadth of this support is noteworthy. The amici include the two federal banking agencies charged with administering and enforcing the federal banking laws at issue, a coalition representing virtually every segment of the banking industry, more than 20 state chief legal officers, leading academic experts on consumer finance and banking law, and the nation’s largest business organization.

Collectively, the amicus briefs argue that Colorado’s interpretation of Section 521 of DIDMCA conflicts with the statute’s text, history, and purpose; threatens the uniform operation of federal banking law; creates significant uncertainty for interstate lending markets; and would adversely affect the availability and cost of credit for consumers and small businesses.

Links to the amicus briefs supporting plaintiffs:

Next Steps

On June 4, 2026, the State of Colorado requested an extension of time to file its opposition brief from June 29 until July 8. The Plaintiffs’ reply brief will be due to be filed 14 days after the State of Colorado files its opposition brief. Oral argument has been scheduled for August 18, 2026.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

Banking Trade Groups Urge 10th Circuit to Reject Colorado’s Attempt to Apply Its Usury Laws to Interstate Loans Made by Out-of-State State Banks

On June 4, 2026, the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, America’s Credit Unions, and 52 state bankers associations filed a supplemental amicus brief supporting the plaintiffs in the en banc proceeding pending before the U.S. Court of Appeals for the 10th Circuit in National Association of Industrial Bankers v. Weiser. Ballard Spahr attorneys Burt Rublin, Alan Kaplinsky, and Ron Vaske represent the amici.

Yesterday, we published a blog about the plaintiffs’ supplemental brief filed by them recently in the 10th Circuit.

The case involves a challenge to Colorado’s effort to apply its state interest-rate limitations to loans made by state-chartered banks located outside Colorado. The litigation concerns how to interpret Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), which allows a state to opt-out of Section 521 of DIDMCA “with respect to loans made in such State.” The question is whether a loan is “made in” the state where the bank is located and performs its lending functions, as the district court held and the banks argued, or whether it is “made in” both the bank’s state and the borrower’s state, as argued by Colorado and its amici.

The supplemental amicus brief was filed after the 10th Circuit granted rehearing en banc and vacated an earlier panel decision. The brief focuses on statutory text, legislative history, practical consequences, and longstanding FDIC interpretations of Section 525 supporting the conclusion that a loan is “made” only in the state where the lender performs its lending functions, not also in the state where the borrower happens to reside or be located when the loan is made.

Congress Chose the Word “Made,” Not “Made or Executed”

A central argument in the amicus brief is that Congress deliberately used the phrase “loans made in such State” in Section 525 of DIDMCA. The brief notes that the same Congress, only three months earlier, used broader language in a different preemption statute relating to FHA loans, referring to loans “made or executed” in a state.

According to the amici, this distinction is critical. If Congress intended Section 525 to apply whenever a borrower executed loan documents in an opt-out state, it knew how to say so. Instead, Congress chose the narrower term “made,” which historically has been understood as referring to the lender’s activities rather than the borrower’s location. Only a lender “makes” a loan.

The brief argues that accepted principles of statutory construction require courts to give meaning to Congress’s different word choices and not treat “made” and “executed” as interchangeable.

DIDMCA Was Designed to Create Parity Between State Banks and National Banks

The amici also emphasizes the historical context in which DIDMCA was enacted. Congress adopted Sections 521 through 523 of DIDMCA to place state-chartered depository institutions on equal footing with national banks.

DIDMCA was enacted in early 1980 during a period of rampant inflation and soaring interest rates. The Federal Reserve discount rate was higher than the interest rate ceilings in various states. As a result, many state-chartered institutions were constrained by those low state usury ceilings while national banks could charge higher rates under Section 85 of the National Bank Act, which allows a national bank to charge either its home state’s rates or 1% over the discount rate. Congress addressed that competitive imbalance by incorporating the language of Section 85 of the National Bank Act into Sections 521-523 of DIDMCA, thus giving federally insured state depository institutions the same federal interest rate authority as national banks, namely, the right to charge their home states’ rates or 1% above the discount rate, whichever is higher.

The brief argues that Colorado’s interpretation of Section 525 would undermine that objective by allowing opt-out states to restrict out-of-state state banks while leaving national banks unaffected. Such a result would create the very disparity Congress sought to eliminate.

Borrower-Location Rules Would Create Significant Operational Problems

The brief devotes substantial attention to the practical consequences of holding that a loan is made not only in the bank’s state but also wherever the borrower happens to be located when the loan is made.

According to the amici, modern interstate lending would become extraordinarily difficult to administer if interest-rate authority depended on where a borrower happened to be located at the moment credit was extended. Credit card issuers and online lenders would be forced to determine and track a borrower’s physical location for every transaction.

The brief provides numerous examples. A borrower might travel between states and use a credit card in multiple jurisdictions. An online loan application could be submitted in one state and approved in another. Recurring transactions could occur without either the merchant or the lender knowing where the borrower is located.

The amici argue that such a regime would require lenders to apply multiple interest-rate structures within a single account and would create what they describe as an “administrative morass” inconsistent with Congress’s intent and the realities of modern interstate banking.

The brief also echoes concerns expressed by Judge Rossman in her dissent from the now-vacated panel opinion, which warned that a borrower-location approach would be difficult to reconcile with today’s interstate and online banking environment.

The FDIC Has Long Taken the Position That An Opt-Out State Cannot Limit the Interest Rates Charged by Out-of-State State Banks

The amici further point to FDIC interpretations of Section 525 dating back to 1983. According to the brief, the FDIC has long taken the position that a state’s decision to opt out of DIDMCA does not affect state-chartered banks located in other states.

The brief cites a 1983 FDIC interpretive letter stating that state banks may continue to rely on the interest-rate authority of their home states when lending to residents of states that have exercised the opt-out right. It also relies on an FDIC amicus brief filed in 1992 in the First Circuit’s Greenwood Trust litigation, where the agency once again argued that Section 525 does not grant opt-out states extraterritorial authority over loans made by state banks chartered elsewhere.

According to the amici, these longstanding FDIC interpretations reinforce the conclusion that Section 525 applies only to loans made by institutions located in the opt-out state.

Looking Ahead

The 10th Circuit’s en banc decision will have significant implications for interstate lending programs conducted by state-chartered banks and credit unions. If Colorado’s interpretation were adopted, lenders could face a patchwork of state-specific interest-rate restrictions tied to borrower location, potentially reshaping interstate consumer lending markets.

The banking and credit union trade associations urge the court to affirm the district court’s ruling and hold that a loan is “made” only in the state where the lender performs its lending functions. Such a ruling, they argue, would be consistent with DIDMCA’s text, legislative history, FDIC interpretations, and Congress’s goal of maintaining parity between state-chartered institutions and national banks.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

OCC Files Amicus Brief Supporting Challenge to Colorado’s Opt-Out Law and Defending Longstanding Interest-Rate Exportation Principles

On June 4, 2026, the Office of the Comptroller of the Currency (OCC) filed an amicus brief in the en banc proceedings before the U.S. Court of Appeals for the 10th Circuit in National Association of Industrial Bankers v. Weiser, urging the court to affirm the district court’s preliminary injunction against Colorado’s opt-out statute and reject Colorado’s attempt to apply its interest-rate restrictions to loans made by out-of-state state-chartered banks.

This amicus brief supports the plaintiffs who recently filed their supplemental brief in the 10th Circuit. It is very noteworthy and underscores the importance of this case that the OCC submitted an amicus brief in this case since the case involves state-chartered banks and not national banks which are subject to the OCC’s regulatory and supervisory jurisdiction The FDIC, which does have regulatory and supervisory jurisdiction over state-chartered banks, also submitted an amicus brief, which we will discuss in a separate blog.

The OCC’s filing follows closely on the heels of the Federal Deposit Insurance Corporation’s amicus brief supporting the plaintiffs-appellees. Together, the two federal banking agencies responsible for supervising national banks and state nonmember banks have now aligned behind the position that Colorado’s interpretation of Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) is inconsistent with the statute’s text, structure, purpose, and historical implementation. The OCC’s brief, however, offers a distinct perspective rooted in the agency’s administration of the National Bank Act and decades of precedent concerning interstate lending and interest-rate exportation.

DIDMCA was Enacted to Put State Banks on Equal Footing With National Banks

The OCC begins with a discussion of the dual banking system and Congress’s longstanding efforts to preserve competitive equality between national banks and state-chartered banks. According to the OCC, DIDMCA Section 521 was enacted specifically to eliminate the competitive disadvantage that state banks faced because national banks had long enjoyed the ability under Section 85 of the National Bank Act to charge not only the interest rates allowed by their home states’ usury laws, but also 1% above the Federal Reserve discount rate. When DIDMCA was enacted, the Federal Reserve discount rate was above the usury limit in certain states, which placed state depository institutions in those states at a disadvantage in competing with national banks in their states.

Two years prior to DIDMCA, the Supreme Court’s decision in Marquette National Bank v. First of Omaha Service Corp., 439 U.S. 299 (1978) held that national banks could export the interest rates allowed under Section 85 and that usury limits in the borrower’s state were preempted, which greatly facilitated the development of interstate lending markets. DIDMCA gave state banks the same federal interest-rate and exportation authority enjoyed by national banks.

According to the OCC, Colorado’s interpretation of Section 525 of DIDMCA would undermine the very parity Congress sought to create.

Congress Borrowed National Bank Act Language — and Its Established Meaning

A central theme of the OCC’s brief is that Congress deliberately borrowed language from Section 85 of the National Bank Act when it enacted DIDMCA Section 521.

The OCC notes that both statutes authorize banks to charge interest based on the laws of the state “where the bank is located.” Because Congress used the same operative language, it also imported the established judicial and regulatory interpretations that had developed under the National Bank Act. Those interpretations consistently focus on the location of the bank rather than the location of the borrower.

The OCC emphasizes that when Congress enacted DIDMCA in 1980, it did so against the backdrop of the Supreme Court’s Marquette decision, which held that a national bank may export interest rates from the state where the bank is located regardless of where borrowers reside. The Court looked to the bank’s location, not the borrower’s location, to determine which state’s interest-rate laws applied.

That historical context, according to the OCC, strongly supports reading DIDMCA in the same manner.

OCC Highlights Decades of Regulatory Guidance Focusing on the Bank’s Location

The OCC further argues that decades of regulatory interpretations have consistently focused on where the bank conducts lending activities rather than where borrowers reside.

Following the advent of interstate branching, the OCC developed a framework for determining where a bank is located for interest-rate purposes. Under that framework, the relevant inquiry focuses on the bank’s lending functions and expressly disregards the borrower’s state of residence. The OCC notes that both OCC and FDIC guidance have long followed this approach.

The agency argues that these longstanding interpretations have become an integral part of the nation’s interstate banking system and should not be displaced by Colorado’s borrower-focused approach.

The Panel Majority Misapplied the Presumption Against Preemption

One of the more significant legal arguments in the OCC’s brief concerns federal preemption.

The OCC contends that the now-vacated panel majority improperly relied on a presumption against preemption. According to the OCC, Congress expressly preempted conflicting state usury laws in DIDMCA Section 521. Because Congress included an explicit preemption provision, courts should focus on the statutory text rather than invoke any presumption against preemption.

The OCC argues that once the statute is read according to its text, the result is straightforward: Section 521 establishes a broad rule based on the location of the bank, while Section 525 creates only a narrow exception. That exception should be interpreted consistently with the broader statutory framework and therefore should likewise depend on the bank’s location rather than the borrower’s location.

Colorado’s Interpretation Would Allow One State to Regulate Banks Nationwide

Like the FDIC, the OCC warns that Colorado’s interpretation would have consequences extending far beyond Colorado.

According to the OCC, Congress intended Section 525 to be a limited exception that allows a state to restore pre-DIDMCA treatment within its own borders. Colorado’s interpretation would transform that limited exception into a mechanism through which one state could effectively dictate the permissible interest rates for state-chartered banks located throughout the country whenever they lend to Colorado residents.

The OCC argues that such a result would be directly contrary to DIDMCA’s purpose of promoting competitive equality between state and national banks. It also would allow an opt-out state to export its own policy choices to institutions located in non-opt-out states.

OCC Warns Against Destabilizing Established Banking Law

Perhaps the most noteworthy portion of the brief appears near the end.

The OCC cautions that even if the court were ultimately to disagree regarding the proper interpretation of Section 525, it should not cast doubt on the longstanding meaning of the phrase “where the bank is located” in Section 521. The agency warns that disturbing decades of settled interpretations could create significant uncertainty throughout the banking system and potentially affect not only state banks operating under DIDMCA but also national banks operating under the National Bank Act.

The OCC specifically invokes the Supreme Court’s warning in Marquette against adopting interpretations that would throw the nation’s interstate banking system into confusion. In the OCC’s view, preserving established understandings regarding bank location is essential to maintaining a stable nationwide credit market.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

FDIC Files Amicus Brief Supporting Challenge to Colorado’s Opt-Out Interest Rate Law

On June 4, 2026, the Federal Deposit Insurance Corporation (FDIC) filed an amicus brief in the en banc proceedings pending before the U.S. Court of Appeals for the 10th Circuit in National Association of Industrial Bankers v. Weiser, strongly supporting the plaintiffs-appellees’ challenge to Colorado’s attempt to apply its usury laws to loans made by out-of-state, state-chartered banks.

We recently blogged about an amicus brief we submitted on behalf of a consortium of national and state trade associations of financial institutions in the same case. Our amicus brief describes the issue pending before the 10th Circuit and the status of it.

A Significant Reversal by the FDIC

The filing is notable because the FDIC previously submitted amicus briefs in the district court and 10th Circuit in this litigation taking a different position. That occurred during the Biden administration when the FDIC was under different leadership. The agency expressly acknowledges that it withdrew its earlier brief in the 10th Circuit before the oral argument because it no longer believes that position reflected the best reading of the statute and because it was inconsistent with the agency’s historical approach to determining where a loan is made for purposes of Section 525 of DIDMCA.

That reversal significantly strengthens the position of the banking industry plaintiffs, which are the National Association of Industrial Bankers, the American Financial Services Association, and the American Fintech Council. A copy of the plaintiffs’ supplemental brief in the 10th Circuit is linked here.

FDIC Emphasizes Competitive Equality Between State and National Banks

The FDIC grounds its argument in the long-standing Congressional objective of maintaining competitive equality between state-chartered banks and national banks. Indeed, the preamble to Section 521 expressly states that it was enacted “[i]n order to prevent discrimination against State-chartered insured banks…with respect to interest rates.” The agency explains that Section 521 was enacted to ensure that state-chartered banks enjoy the same federal interest rate and exportation authority that national banks possess. According to the FDIC, allowing Colorado to dictate the interest rates that out-of-state state banks may charge Colorado borrowers would “radically alter” that Congressional framework.

The FDIC further argues that Colorado’s interpretation would undermine the dual banking system by imposing substantial operational and financial burdens on state-chartered institutions seeking to lend across state lines. Such an interpretation, the agency contends, would frustrate Congress’s purpose of preserving competition between state and national banks.

The FDIC Rejects a Borrower-Focused Test

The brief repeatedly emphasizes that the statutory phrase “loans made in such State” should be interpreted from the perspective of the lender rather than the borrower.

The FDIC notes that ordinary usage focuses on the lender’s actions when discussing who “makes” a loan. Borrowers do not ordinarily describe themselves as making loans; rather, banks make loans and borrowers receive or obtain them. The agency also points out that other provisions of DIDMCA similarly focus on the lender and its location rather than the borrower’s residence.

According to the FDIC, limiting a state’s opt-out authority to loans made by banks located in that state is consistent with Congress’s intent. Section 525 was designed to allow a state to restore its own usury regime if it wished, not to permit one state to regulate lending activity conducted by banks located in other states.

Federalism Concerns Cut Against Colorado’s Position

One of the most important aspects of the FDIC’s brief is its federalism analysis.

Colorado has argued that its interpretation protects state sovereignty by allowing Colorado to regulate lending to its residents. The FDIC responds that Colorado’s interpretation would actually interfere with the sovereignty of other states that have chosen not to opt out of DIDMCA’s interest-rate exportation regime.

The agency argues that Colorado’s borrower-focused approach would effectively permit one state to override the policy choices made by other states and would allow Colorado to dictate the lending terms available to banks chartered elsewhere. According to the FDIC, that result would not promote federalism but instead would undermine it.

Historical FDIC Guidance Supports the Industry’s Position

The FDIC also relies heavily on its historical interpretations of Section 525 of DIDMCA.

The agency cites its 1983 interpretive letter stating that a state-chartered bank could rely on the interest-rate authority of the state where the bank is located when extending credit to residents of other states, including states that had opted out of federal preemption.

The brief further cites a prior FDIC amicus filing in the Greenwood Trust litigation in 1992 in which the agency stated that a state opting out of Section 521 does not obtain extraterritorial authority over loans made by banks chartered in other states merely because the borrower resides in the opt-out state. (Ballard Spahr lawyers Burt Rublin and Alan Kaplinsky represented Greenwood Trust Company (which later changed its name to Discover Bank) in that litigation.)

Although Colorado has relied on an FDIC interpretive letter issued in 1988, the FDIC argues that the letter does not support Colorado’s position because it expressly stated that the borrower’s location is not controlling.

Where Is a Loan Made?

The FDIC’s brief identifies the same factors it has historically used to determine where a bank makes a loan for purposes of Section 521.

According to the agency, the relevant inquiry focuses on where the bank is located or where it performs key non-ministerial lending functions, including:

Final loan approval;
Communication of the final credit decision; and
Disbursement of loan proceeds.

The borrower’s location, standing alone, is irrelevant. Instead, the location of the bank or where the bank performs its core lending activities provides the appropriate basis for determining where a loan is made.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

21 States File Amicus Brief Supporting Challenge to Colorado’s Effort to Regulate Interest Rates Charged by Out-of-State State Banks

The en banc proceedings in National Association of Industrial Bankers v. Weiser continue to attract significant attention. On June 4, 2026, the attorneys general of Utah and 20 other states filed an amicus brief urging the U.S. Court of Appeals for the 10th Circuit to affirm the district court’s decision enjoining Colorado’s attempt to utilize its opt out pursuant to Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) as a basis to regulate the interest rates charged to Colorado borrowers by out -of-state state banks.

The amici states are Alabama, Arkansas, Florida, Georgia, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, West Virginia, Wyoming, and Utah, which took the lead in preparing the brief.

Focus on the Dual Banking System

The states’ brief is notable because it frames the dispute primarily as a threat to the nation’s dual banking system rather than merely a question of statutory interpretation.

According to the amici, DIDMCA was enacted to create competitive equality between national banks and state-chartered depository institutions by giving state banks the same interest rate authority as national banks, namely, the right to charge either home state interest rates or 1% above the Federal Reserve discount rate, whichever is higher. The amici emphasize that Congress expressly stated in Section 521 that DIDMCA was intended “to prevent discrimination against State-chartered insured banks.”

The states argue that Colorado’s interpretation of DIDMCA would undermine that congressional objective by subjecting state-chartered institutions to restrictions that do not apply to national banks.

Historical Meaning of “Loans Made in Such State”

The central issue before the en banc court is the meaning of Section 525’s opt-out language permitting a state to opt out with respect to “loans made in such State.”

The amici argue that, when Congress enacted DIDMCA in 1980, both banking law and longstanding judicial precedent understood a loan to be “made” where the lender is located, not where the borrower resides.

The brief relies heavily on Marquette, as well as nineteenth-century cases holding that loans originated by out-of-state lenders are governed by the law of the lender’s state. According to the amici, Congress legislated against this established background and therefore could not have intended the phrase “loans made in such State” to encompass every loan made to a resident of the opt-out state.

The states further contend that, at the time DIDMCA was enacted, interstate banking was extremely limited and the notion that one state would regulate a bank chartered and located entirely in another state was virtually unknown. As a result, they argue that Congress could not have intended DIDMCA’s opt-out provision to authorize the type of extraterritorial regulation Colorado seeks to impose.

Concerns About State Regulatory Authority

The brief also advances a practical argument that has received comparatively little attention in the litigation thus far.

The amici contend that allowing Colorado to regulate loans made by banks chartered in other states would interfere with those states’ ability to supervise and examine their own institutions.

The states explain that bank regulators routinely review loan portfolios and evaluate loan-loss reserves using their own state regulatory frameworks. If Colorado law applies whenever a borrower resides in Colorado, out-of-state regulators would be forced to account for Colorado-specific requirements when evaluating their institutions’ loan portfolios.

According to the amici, this would complicate examinations, increase regulatory uncertainty, and impair states’ ability to monitor the financial condition of their own banks.

The brief warns that such interference would affect not only regulators but also shareholders, depositors, and customers of state-chartered institutions.

Competitive Disparity Between State and National Banks

Perhaps the most significant policy argument advanced by the amici concerns competitive equality.

The states argue that Colorado’s law places state-chartered institutions at a competitive disadvantage because national banks remain protected by federal preemption and continue to enjoy unrestricted rate exportation authority under the National Bank Act.

Under Colorado’s interpretation, state-chartered institutions would be required to comply simultaneously with federal law, the law of their chartering state, and Colorado usury law whenever they lend to Colorado residents. National banks would face no comparable burden.

The amici contend that this disparity directly conflicts with DIDMCA’s purpose of preserving usury parity between state-chartered and federally chartered institutions.

They further argue that such a regime would create pressure for state-chartered banks to convert to national bank charters in order to avoid the additional regulatory burdens imposed by Colorado’s law. Because preserving the dual banking system was one of Congress’s principal objectives in enacting DIDMCA, the amici maintain that Colorado’s interpretation should be rejected.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

U.S. Chamber of Commerce Amicus Brief Urges 10th Circuit to Reject Presumption Against Preemption in Colorado DIDMCA Case

The en banc 10th Circuit continues to receive substantial support for affirming the district court’s decision in National Association of Industrial Bankers v. Weiser, the closely watched case addressing the scope of the opt-out provision in Section 525 of the Depository Institutions Deregulation and Monetary Control Act’s (DIDMCA), which empowers a state to opt out of the interest rate provisions in Section 521 of DIDMCA with respect to “loans made in such State.”

On June 4, 2026, the Chamber of Commerce of the United States of America filed an amicus brief supporting the plaintiffs-appellees and urging the en banc court to affirm the district court’s preliminary injunction against enforcement of the Colorado opt out statute. Unlike several other amicus briefs that have emphasized the practical consequences of the panel decision for interstate lending and credit availability, the Chamber’s brief focuses principally on federal preemption doctrine and argues that the panel majority’s analysis was fundamentally flawed because it relied on a presumption against preemption when interpreting the express preemption provision in Section 521 of DIDMCA.

The Chamber’s Core Argument: No Presumption Against Preemption Applies

The Chamber emphasizes that Section 521 of DIDMCA contains an explicit preemption provision that should be interpreted according to its plain language without any judicial thumb on the scale favoring state authority.

The brief points to DIDMCA’s operative language, which provides that a state-chartered, FDIC-insured bank may charge interest at the rate permitted by its home state law “[n]otwithstanding any State constitution or statute,” and that conflicting state laws “are hereby preempted” for purposes of the statute. According to the Chamber, Congress could hardly have spoken more clearly.

The Chamber argues that the panel majority nevertheless began its analysis with the presumption that federal law should not be read to displace state law absent a “clear and manifest” congressional purpose. In the Chamber’s view, that approach improperly influenced the panel’s interpretation of DIDMCA’s opt-out provision and led it to adopt an unduly narrow reading of the statute.

A Broader Attack on the Presumption Against Preemption

The most notable aspect of the Chamber’s brief is its extensive criticism of the presumption against preemption itself.

The Chamber argues that the presumption lacks support in:

The text of the Supremacy Clause;
The historical understanding of federal supremacy at the time of the Founding;
The Constitution’s structural allocation of authority between Congress and the courts.

The brief relies heavily on scholarship and Supreme Court opinions questioning whether courts should employ a special rule that disfavors preemption. According to the Chamber, the Supremacy Clause directs courts to apply valid federal law as supreme over conflicting state law and does not require Congress to satisfy any heightened burden before federal law displaces state regulation.

The Chamber further argues that the presumption improperly interferes with Congress’s policy choices by making it more difficult for Congress to establish uniform national regulatory standards.

Express Preemption Cases Are Different

Even accepting the continued existence of the presumption, the Chamber argues that it has no role in this case because Section 521 of DIDMCA contains an express preemption clause.

The brief emphasizes Supreme Court precedent stating that where Congress has expressly defined the scope of preemption, courts should focus on the statutory text rather than invoke presumptions favoring state authority.

According to the Chamber, the district court correctly followed this approach when it concluded that the “inquiry begins and ends with statutory language when its meaning is plain.”

The Chamber also notes that the 10th Circuit itself has repeatedly recognized that the presumption against preemption does not apply in express-preemption cases.

Federal Interests in Banking Override Any Presumption

The Chamber additionally argues that even if some version of the presumption survives in express-preemption cases, it should not apply here because banking is an area characterized by a longstanding and substantial federal presence.

The brief reviews the extensive federal regulation of both state and national banks, including:

FDIC supervision and deposit insurance requirements;
Federal safety-and-soundness standards;
Federal consumer financial protection statutes;
Congress’s longstanding efforts to ensure competitive equality between state and national banks.

The Chamber contends that DIDMCA was enacted precisely to create a uniform national framework for interest-rate exportation and to prevent states from undermining interstate banking through conflicting interest-rate restrictions.

In the Chamber’s view, the panel majority overstated Colorado’s historical authority in this area because the specific issue presented—whether Colorado may regulate interest rates charged by out-of-state state-chartered banks engaged in interstate lending—is not a traditional field of exclusive state regulation.

Support for Judge Rossman’s Interpretation

Like several other amici supporting the plaintiffs, the Chamber endorses Judge Rossman’s dissenting opinion asserting that the Colorado effort to regulate interest rates of out-of-state state banks is preempted by Section 521 of DIDMCA.

The brief argues that the proper reading of Section 525’s opt-out provision is that a loan is “made” where the lending bank performs its non-ministerial lending functions and is located, rather than where the borrower resides.

According to the Chamber, that interpretation best fits:

The statutory text;
DIDMCA’s overall structure;
The statute’s legislative purpose of creating competitive parity between state and national banks;
The realities of modern interstate and online banking.

The Chamber warns that the panel majority’s contrary interpretation would create precisely the kind of state-by-state patchwork that Congress sought to eliminate through DIDMCA.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

Prominent Consumer Credit Scholars and Center for Individual Freedom File Amicus Brief Supporting Plaintiffs in Colorado Opt-out Appeal

On June 2, 2026, Professors Todd Zywicki and Thomas Miller, Jr., together with the Center for Individual Freedom, filed an amicus brief in support of the plaintiff trade associations in National Association of Industrial Bankers, et al. v. Weiser, currently pending before the U.S. Court of Appeals for the 10th Circuit, sitting en banc. The brief urges affirmance of the district court’s decision enjoining Colorado’s effort to apply its interest-rate caps to loans made by out-of-state, state-chartered banks on the ground that it is preempted by federal banking law.

The amici are well-known scholars of consumer credit markets and financial regulation. Professor Zywicki is a professor at George Mason University’s Antonin Scalia Law School, former Chair of the CFPB Taskforce on Federal Consumer Financial Law, and a leading scholar on consumer finance. Professor Miller holds the Jack R. Lee Chair of Financial Institutions and Consumer Finance at Mississippi State University and has published extensively on consumer lending and small-dollar credit markets. The Center for Individual Freedom is a nonprofit organization focused on economic liberty and limited government. The amici explain that they filed the brief because of the harmful consequences to competition and consumers that would result from a reversal of the district court’s decision.

Three Principal Arguments

The amici advance three principal arguments.

1. Colorado’s Interpretation Conflicts with the Purpose of Section 521 of DIDMCA

The brief argues that Congress enacted Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) to place state-chartered banks on an equal competitive footing with national banks after the Supreme Court’s decision in Marquette National Bank v. First of Omaha Service Corp. According to the amici, Congress sought to eliminate discrimination against state-chartered banks by allowing them to export their home state interest rates in their interstate loans in the same manner as national banks.

The amici contend that Colorado’s interpretation of DIDMCA’s opt-out provision would undermine that congressional objective by allowing a single state to impose its interest-rate restrictions on banks chartered in other states. They argue that such a result would effectively negate Congress’s effort to preserve competitive parity between state and national banks and would permit opt-out states to interfere with the banking laws of other states.

2. Colorado’s Reading Is Inconsistent with the Realities of Interstate Lending

The brief next argues that Colorado’s position ignores longstanding principles governing interstate lending. The amici emphasize that consumers historically have been able to obtain credit from lenders located in other states and that the Supreme Court recognized this reality in Marquette. The brief notes that consumers have long crossed state lines to obtain credit unavailable in their home states and that modern technology has simply expanded those opportunities through mail, telephone, and internet-based lending.

According to the amici, treating the borrower’s location as determinative for interest rate ceilings would create substantial operational uncertainty for interstate lending programs, particularly for credit cards and other nationwide products. They argue that a lender must be able to determine where a loan is made based on the location of the issuing bank rather than the location of borrowers, merchants, or individual transactions. Otherwise, the regulatory framework governing interstate banking would become unworkable.

3. Colorado’s Interpretation Would Harm Consumers

The most extensive portion of the brief focuses on consumer welfare and access-to-credit concerns. The amici contend that state-chartered banks play a critical role in serving local communities, small businesses, agricultural borrowers, and consumers who may have difficulty obtaining credit from large national banks. They further argue that partnerships between state-chartered banks and Fintech companies have expanded access to credit for underserved and “credit invisible” consumers.

The brief warns that if state-chartered banks are subjected to varying and overlapping interest-rate restrictions imposed by multiple states, many Fintech providers may migrate to national bank charters or abandon certain lending programs altogether. The amici argue that such a development would reduce competition, weaken the dual banking system, and diminish access to credit.

The amici also devote significant attention to economic studies addressing interest-rate caps and usury laws. They cite research finding that rate caps reduce credit availability for higher-risk borrowers, particularly subprime consumers, while increasing credit rationing and limiting consumer choice. The brief points to studies involving Illinois, Arkansas, Iowa, New Mexico, and Colorado as evidence that restrictive rate caps reduce access to small-dollar credit products and disproportionately affect consumers with lower credit scores or limited credit histories.

Finally, the amici emphasizes that Colorado consumers already experience reduced access to certain forms of credit as a result of the state’s existing regulatory framework. They argue that extending Colorado’s rate-cap regime to loans made by out-of-state state-chartered banks would further reduce competition and make credit less available to Colorado borrowers.

Observations

This amicus brief is noteworthy because it shifts the focus from the statutory text and historical interpretation of DIDMCA to the broader economic and consumer-welfare consequences of the 10th Circuit panel’s decision. While many of the amicus briefs filed in support of the plaintiffs emphasize congressional intent, federal banking policy, and the structure of the dual banking system, Professors Zywicki and Miller and the Center for Individual Freedom concentrate heavily on the practical effects that Colorado’s interpretation would have on competition, Fintech-bank partnerships, and consumer access to credit.

The brief therefore provides the en banc court with a detailed economic-policy framework for evaluating the consequences of allowing a state’s DIDMCA opt-out election to govern loans made by out-of-state state-chartered banks. Together with the other amicus briefs filed in support of the plaintiffs, it reinforces the argument that Congress enacted DIDMCA to preserve parity between state and national banks and that Colorado’s interpretation would upset that balance while reducing credit availability for consumers.

Alan S. Kaplinsky, Burt M. Rublin, and Ronald K. Vaske

NCUA Issues Interim Final Rule Clarifying Federal Credit Union Authority to Charge Noninterest Fees and Preempt State Regulation

On June 8, 2026, the National Credit Union Administration (NCUA) announced the adoption of an Interim Final Rule clarifying the authority of federal credit unions (FCUs) to impose non-interest charges and fees, including interchange fees associated with payment card transactions. The rule, which becomes effective on June 30, 2026, reinforces NCUA’s position that federal law exclusively governs FCUs’ authority to assess such fees and that state laws purporting to regulate those fees are preempted.

It is very unclear, however, whether the courts will defer to the NCUA’s Interim Final Rule, particularly since a court has already ruled on February 10, 2026, that the Federal Credit Union Act itself and the regulations then in effect do not preempt the core provision of the Illinois Interchange Fee Prohibition Act (IFPA), 815 ILCS151/150-1 et seq. which bans Issuers, Payment Card Networks, Acquirers, and other transaction processors from receiving from or charging Merchants any interchange fees on the portion of a transaction made up of state and local taxes and gratuities. See Illinois Bankers Association v. Raoul, F.Supp.3d, 2026 WL 371196 (N.D. Ill. Feb. 10, 2026). The Court recently confirmed its Feb. 10 opinion with another opinion on June 1, 2026, with respect to there being no Federal Credit Union Act preemption regarding the core provision of the IFSA banning the charging or receipt of interchange fees on taxes and gratuities.

Background

The Interim Final Rule comes against the backdrop of increasing efforts by some states, most notably Illinois, to regulate interchange fees and other charges associated with payment card transactions. Several states have enacted (e.g., Illinois) or considered legislation restricting the calculation or collection of interchange fees on portions of transactions involving taxes, gratuities, or other components of a purchase.

The NCUA stated that it already views its existing regulations as granting FCUs broad authority to establish and collect noninterest charges and fees, including fees that are established or determined by third parties. Nevertheless, the agency concluded that additional clarification was warranted to eliminate uncertainty and to ensure that FCUs are not placed at a competitive disadvantage relative to national banks. The Interim Final Rule relies on several powers provided in the Federal Credit Union Act, including a FCU’s power to make contracts, the power to make loans and lines of credit, and the exercise of incidental powers.

Key Provisions of the Rule

The Interim Final Rule expressly confirms that:

Federal credit unions possess authority under the Federal Credit Union Act to impose noninterest charges and fees, including interchange fees associated with payment card services.
The NCUA has exclusive authority to regulate FCUs’ exercise of that power.
State laws that attempt to regulate, limit, prohibit, or otherwise affect FCUs’ noninterest charges and fees related to payment card services are preempted and do not apply to FCUs.

The agency emphasized that the rule is intended to clarify existing authority rather than create new powers.

Alignment with OCC Action

The NCUA specifically noted that the rule is intended to avoid disparate treatment between federal credit unions and national banks. The agency’s action follows a recently issued interim final rule by the Office of the Comptroller of the Currency (OCC) addressing the same issue for national banks and federal savings associations.

As readers of this blog may recall, the OCC’s rule reaffirmed that federal banking law preempts state efforts to regulate national banks’ noninterest charges and fees, including interchange fees. By adopting a parallel rule, the NCUA seeks to ensure that federal credit unions enjoy equivalent protection from state regulation.

Significance for Federal Credit Unions

The Interim Final Rule provides important regulatory support for FCUs that issue payment cards or participate in card payment networks. The rule strengthens the legal basis for challenging state laws, like Illinois’s IFSA that seek to regulate interchange fees or otherwise interfere with federally authorized fee structures.

The rule may also influence ongoing policy debates regarding state interchange fee legislation. While states remain free to regulate state-chartered institutions to the extent permitted by federal law, the NCUA has made clear that FCUs operate under a federal regulatory framework that leaves no room for state regulation of noninterest charges and fees related to payment card services.

Looking Ahead

Although the rule takes effect on June 30, 2026, it is being issued as an Interim Final Rule, meaning that the NCUA will accept and consider public comments before issuing a final rule. Given the increasing attention that state legislatures and merchants have devoted to interchange fee regulation, the agency’s action is likely to draw significant interest from credit unions, banks, payment networks, merchants, and consumer advocates.

The NCUA’s action represents another important development in the growing federal-state preemption debate surrounding payment card interchange fees. Together with the OCC’s recent rulemaking, it signals a strong federal regulatory commitment to preserving the ability of federally chartered financial institutions to establish and collect payment card-related fees free from state interference.

It is too early for FCUs to declare victory in Illinois or elsewhere since the only court to consider this preemption issue has determined that there is no preemption. The open question, of course, is whether the district court (upon reconsideration) or 7th Circuit to which the district court’s judgment has been appealed will uphold the validity of any final preemption rule which the NCUA issues.

It is true that the district court, in its June 1, 2026, opinion, upheld the validity of the OCC’s amended regulation and order upon which the NCUA’s Interim Final Rule was based. However, national banks and FCUs powers and preemptive authority are derived from completely different federal statutes. Moreover, the Supreme Court’s Barnett Bank opinion which holds that state law is preempted if it conflicts with or significantly impairs a federally created power under the National Bank Act. The district court has concluded that the Barnett Bank preemption doctrine does apply to FCUs.

Alan S. Kaplinsky and Kaley Schafer

FTC Obtains Restraining Order Against Mortgage Relief Assistance Operation

A U.S. district court Judge has temporarily halted an allegedly deceptive mortgage assistance relief operation lured homeowners with promises that it could provide mortgage relief assistance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The order, entered in the U.S. District Court for the Central District of California, was issued at the request of the FTC.

“The court granted a temporary restraining order against National Amendment Assistance (also doing business as N.A.A.) after the mortgage assistance relief operator and related entities allegedly misled consumers into paying unlawful upfront fees in exchange for guarantees of lower mortgage rates and monthly payments that never materialized,” the FTC said, in a statement.

“When Americans look for ways to cut costs and lower their monthly bills, they shouldn’t have to worry about being targeted by mortgage scammers,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said.

The FTC complaint states that since at least 2022, Southern California-based companies steered by certain individuals “have mailed letters to homeowners nationwide claiming to offer mortgage relief under the CARES Act. These letters claim that consumers can obtain a reduction in their home mortgage rate due to a special mortgage adjustment program connected to a ‘CARES-Act Homeowner Assistance Fund or Lender Specific In-house Mortgage Adjustment Program’ and urge the consumer to call a phone number to learn more.” The complaint notes that the letters provide specific terms for the mortgage modification that the consumer is allegedly eligible to obtain, including a lower mortgage rate and monthly mortgage payment.”

The defendants also allegedly misrepresent that consumers have a “grace period,” during which they are not required to pay their mortgage, according to the complaint.

The FTC contends that these promises are false. “Ultimately, the defendants do not obtain any mortgage relief for consumers and simply walk away with consumers’ upfront fees and financial information. Consumers—many of whom are often already in financial distress—have lost the money they paid to the defendants and have fallen behind on their mortgage payments, with some facing foreclosure or default.”

Specifically, the complaint alleges that the defendants violated the law by deceptively:

“Promising mortgage loan modifications that will make consumers’ payments more affordable;
Claiming their mortgage assistance relief services are associated with a federal government homeowner assistance plan;
Instructing consumers that they do not have to or should not make monthly payments toward their mortgage;
Collecting upfront payments before consumers executed a written agreement between the consumer and the loan holder or servicer; and
Making false statements to induce consumers to provide the defendants with customer information of a financial institution, in violation of the Gramm-Leach-Bliley (GLB) Act.”

The complaint contends that the defendants have violated the FTC Act, Mortgage Assistance Relief Services (MARS) Rule, and the GLB Act. The FTC seeks redress for affected consumers.

Among other provisions, the MARS Rule provides that it is a violation of the Rule for a mortgage assistance relief service provider to engage in the following conduct:

Misrepresenting, expressly or by implication, any material aspect of any mortgage assistance relief service, including but not limited to:

The likelihood of negotiating, obtaining, or arranging any represented service or result.
The amount of time it will take the mortgage assistance relief service provider to accomplish any represented service or result.
That a mortgage assistance relief service is affiliated with, endorsed or approved by, or otherwise associated with a government entity or governmental homeowner assistance plan.

The consumer’s obligation to make scheduled periodic payments or any other payments pursuant to the terms of their mortgage loan.
The amount of money or the percentage of the debt amount that a consumer may save by using the mortgage assistance relief service.
Request or receive payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer’s mortgage loan holder or servicer incorporating the offer of mortgage assistance relief the provider obtained from the consumer’s mortgage loan holder or servicer.

Richard J. Andreano, Jr. and John L. Culhane, Jr.

Congress Takes Aim at AI: The Push for Federal AI Framework

On June 4, 2026, House Representatives Jay Obernolte (R-Calif.) and Lori Trahan (D-Mass.) released a 269-page bipartisan discussion draft called the “Great American AI Act,” in an attempt to seek feedback from experts, stakeholders, and the public before formally introducing the bill. The Great American AI Act would establish a national standard for governing artificial intelligence and would preempt state regulations targeting AI development for a period of three years. The framework aims to create uniform federal rules for AI, establish worker protections for whistleblowers, bolster U.S. AI research and development, and codify a Center for AI Standards and Innovation within the Commerce Department that would be tasked with developing voluntary guidelines, best practices, and standards for AI security. The draft proposal also requires safety testing and independent auditing requirements and introduces transparency reporting obligations for certain AI companies.

On the Senate side, Marsha Blackburn (R-Tenn.) released a draft proposal in March 2026 called the “TRUMP AMERICA AI Act.” That proposal preempts state laws, rules, or regulations only to the extent it conflicts with a provision of the Act. Among other things, the proposal requires a provider of a “high-risk artificial intelligence system” to undergo audits regarding viewpoint or political affiliation discrimination. The proposal also incorporates two bipartisan bills: the “Kids Online Safety Act,” which would require covered online platforms to implement tools and safeguards to protect users under the age of 17 against online harm, and the “NO FAKES Act,” which would hold AI companies liable for unauthorized use of a creator’s voice or visual likeness.

Taken together, the House and Senate proposals signal that momentum is building in Congress to act on federal AI legislation. However, significant hurdles remain regarding reaching a consensus on federal preemption and how aggressively to regulate AI development. Whether lawmakers can bridge the gap between the industry’s desire for regulatory clarity and the demand for meaningful accountability will determine if or when Congress finally passes a comprehensive AI framework.

Rebecca Krikorian Clary and Gregory P. Szewczyk

Agent Provocateur: How AI Shopping Bots Are Testing Retail Legal Boundaries

Adam Maarec, Stephanie A. Sheridan, and Meegan Brooks, all members of Ballard Spahr’s Litigation Department, examined the effect of artificial intelligence-powered shopping tools on consumers and brands alike.

Writing for TotalRetail, they outline key legal issues that companies should look out for, as well as recommended actions to be best prepared for the evolving landscape around AI.

Read the full article here. (Subscription may be required.)

Adam Maarec, Stephanie Sheridan, and Meegan Brooks

Looking Ahead

Life After RESPA: Addressing Modern Practices the Rule Missed - Webinar

July 9, 2026 – 2:00 PM EST

Speaker: Richard J. Andreano, Jr.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Mortgage Banking Update - June 18, 2026

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