Legal Alert

Mortgage Banking Update - August 6, 2026

August 6, 2026

August 6 – 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 the future outlook on CFPB leadership, federal banking agencies’ joint statement on their approach to handling highly sensitive information during bank examinations, the latest developments on Colorado’s and Oregon’s respective DIDMCA Opt-Out Laws, and other noteworthy updates.

Consumer Finance Monitor Podcast: CFPB’s Revised Section 1071 Rule: What Lenders Need to Know About the New Small Business Lending Reporting Requirements
Consumer Finance Monitor Podcast: New Institute for Consumer Financial Choice Seeks to Reshape the Consumer Finance Policy Debate
Is a ‘Private CFPB’ Emerging? Or Is a New Consumer Protection Ecosystem Taking Shape?
CFPB Director Nominee Brian Johnson Won’t Endorse Eliminating the CFPB
Report: Russell Vought Expected to Remain at CFPB as Senior Adviser Pending Brian Johnson’s Confirmation
Governor Sherrill Selects Christopher Peterson to Lead New Jersey Division of Consumer Affairs
GAO Report Reinforces Trump Administration’s Regulatory Reform Agenda for the Banking Industry
Federal Banking Agencies Adopt Coordinated Approach to Protect Highly Sensitive Information During Bank Examinations
Oregon Proposes Guidance Requiring Nonbank BNPL Providers and Service Providers to Obtain State Lending Licenses
Plaintiffs’ Reply Brief Urges 10th Circuit to Preserve Preliminary Injunction Against Colorado’s DIDMCA Opt-Out Law
FDIC Files Amicus Brief Supporting Preliminary Injunction Against Oregon’s DIDMCA Opt-Out Law
Banking Industry Trade Associations File Comprehensive Amicus Brief Supporting Plaintiffs’ Challenge to Oregon’s Overbroad DIDMCA Opt-Out
Federal Reserve Board and FDIC Propose to Modernize Insider Lending Rules by Updating Regulation O Thresholds
OCC Weighs in on Oregon DIDMCA Opt-Out Litigation with Amicus Brief Supporting a Narrow Reading of Section 525
15 States File Amicus Brief Supporting Challenge to Oregon’s DIDMCA Opt-out Law
Comptroller Gould Highlights Digital Financial Literacy, Responsible Innovation, and the Role of Community Banks
Adding to the Tally: Another Court Denies Bid for Class Certification in Cookie Tracking Case
California DFPI Appeals Trial Court Decision Rejecting Its ‘True Lender’ Theory in OppFi Case
LOOKING AHEAD

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

Consumer Finance Monitor Podcast: CFPB’s Revised Section 1071 Rule: What Lenders Need to Know About the New Small Business Lending Reporting Requirements

In this episode of the Consumer Finance Monitor Podcast, we are pleased to present an audio version of the webinar we conducted on May 27, 2026 examining the CFPB’s revised final rule and its practical implications for banks, credit unions, FinTech companies, and other providers of small business credit.

During this comprehensive discussion, our host, Alan Kaplinsky (founder, former Practice Group Leader for 25 years and now Senior Counsel of the Consumer Financial Services Group) was joined by his Ballard Spahr colleagues Richard Andreano and John Culhane, along with two distinguished guest panelists: Bradley Blower, Principal and Founder of Inclusive-Partners, LLC, and Louis Caditz-Peck, Executive Director of the Responsible Business Lending Coalition.

Key Topics Discussed:

The most significant differences between the CFPB’s original 2023 Section 1071 rule and the revised 2026 final rule.
Why the Bureau substantially increased the institutional coverage threshold from 100 to 1,000 covered originations.
The practical implications of narrowing the definition of a “small business,” reducing the required data points, and excluding merchant cash advances and agricultural loans from coverage.
Whether the revised rule still fulfills Congress’s objectives of promoting fair lending and improving transparency in the small business lending market.
The operational and technology challenges lenders should begin addressing now—even though compliance is not required until January 1, 2028.
How institutions can use Section 1071 data not only for compliance but also as a competitive business intelligence tool.
The potential fair lending, supervisory, and reputational risks created by the public availability of Section 1071 data.
The current status of litigation challenging the original Section 1071 rule and whether additional lawsuits challenging the revised rule are likely.
Predictions regarding how the rule may evolve over time, including whether future administrations could expand its scope in a manner similar to the evolution of HMDA reporting.

Whether your institution expects to be covered by the revised rule or not, this discussion provides valuable insight into the future direction of small business lending regulation and offers practical guidance on how lenders should prepare now for the compliance, operational, and strategic issues that lie ahead.

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

Consumer Finance Monitor Podcast: New Institute for Consumer Financial Choice Seeks to Reshape the Consumer Finance Policy Debate

A newly launched academic institute is seeking to influence the future direction of consumer financial services regulation by promoting a policy framework centered on consumer choice, market competition, empirical research, and innovation. In this episode of the Consumer Finance Monitor Podcast, our host Alan Kaplinsky (founder, former chair for 25 years and now senior counsel) interviewed Professors Todd Zywicki of George Mason University Antonin Scalia Law School, and Tom Miller of Mississippi State University about their newly created Institute for Consumer Financial Choice (ICFC), its mission, and its ambitious agenda.

The Institute officially launched this spring at George Mason University with a two-day conference held jointly with the Federal Trade Commission. The event brought together academics, policymakers, regulators, and practitioners to discuss the future of consumer financial regulation and to revisit the recommendations contained in the CFPB Task Force on Federal Consumer Financial Law’s (Task Force) landmark 2021 report, a report chaired by Professor Zywicki that continues to serve as a central intellectual foundation for the Institute’s work.

The Task Force was established by then-CFPB Director Kathleen Kraninger in 2020 to conduct a comprehensive review of the federal consumer financial protection regime. After more than a year of work, the five-member Task Force issued its two-volume report in January 2021. The first volume, spanning nearly 900 pages, provided an exhaustive analysis of the history, economics, and legal framework of consumer financial regulation, while the second contained more than 100 recommendations for legislative, regulatory, and institutional reform. The report advocated greater reliance on empirical evidence, market competition, consumer choice, and rigorous cost-benefit analysis in developing consumer financial policy.

The report immediately became one of the most controversial products ever issued under CFPB auspices. Consumer advocacy organizations sharply criticized it as reflecting an overly market-oriented philosophy and as favoring industry interests at the expense of consumer protection. After Director Rohit Chopra assumed leadership of the CFPB later in 2021, the Bureau formally disavowed the Task Force’s work stating that it did not represent the views of the CFPB and characterizing the Task Force as having been established in violation of the Federal Advisory Committee Act. The report was removed from the CFPB’s principal website and effectively relegated to history. Nevertheless, despite its official repudiation, the report continues to be cited by academics, practitioners, and policymakers for its extensive empirical research, historical analysis, and comprehensive treatment of federal consumer financial law. Indeed, one of the principal goals of the new Institute for Consumer Financial Choice is to revive scholarly engagement with the report’s analysis and recommendations and to use it as a foundation for future research and policy development.

A Different Vision of Consumer Protection

Unlike many organizations active in consumer finance policy, the ICFC begins from the premise that well-functioning competitive markets are themselves an important form of consumer protection. Rather than viewing regulation and deregulation as opposite ends of a policy spectrum, the Institute seeks to identify regulatory approaches that encourage innovation, expand consumer choice, and improve market performance while still protecting consumers from genuine abuses.

As Professor Zywicki explained during our discussion, technological developments, including FinTech innovation, stablecoins, artificial intelligence, and new methods of product distribution, require policymakers to rethink traditional approaches to consumer financial regulation. The Institute intends to develop an intellectual framework better suited to these rapidly evolving markets.

Beyond Research: Influencing Policy

Although rigorous empirical research lies at the core of the Institute’s mission, its ambitions extend well beyond academic scholarship. The ICFC plans to:

Produce peer-reviewed empirical research;
File amicus briefs in important litigation;
Submit regulatory comment letters;
Educate students, policymakers, and industry participants; and
Serve as a resource for legislators and regulators confronting emerging consumer finance issues.

Professor Miller emphasized that high-quality empirical research remains essential to sound policymaking. The Institute hopes to become a repository for valuable industry data that can support rigorous academic work, while maintaining complete academic independence from those providing funding or data.

Revisiting the CFPB Task Force Report

One of the Institute’s earliest priorities is breathing new life into the CFPB Task Force Report issued in 2021. Although largely ignored during the Biden administration, Professors Zywicki and Miller believe the report remains one of the most comprehensive analyses ever produced concerning federal consumer financial law.

The Institute recently hosted an academic symposium devoted entirely to the Task Force Report, encouraging scholars from across the ideological spectrum to analyze, critique, and expand upon its recommendations. According to Professor Zywicki, the report was intended to serve as a long-term roadmap for researchers, legislators, regulators, and courts, not merely as a report directed to a particular administration.

Research Priorities

The Institute has already identified an ambitious research agenda that includes:

Evaluating whether the Military Lending Act has improved access to credit for servicemembers;
Conducting new empirical research on the pawn industry;
Studying ancillary financial products such as GAP insurance and extended warranties;
Examining payday lending regulation;
Investigating rural financial inclusion;
Exploring stablecoins, cryptocurrency, and digital payments; and
Assessing how existing regulatory structures can better accommodate technological innovation.

The emphasis throughout is on gathering empirical evidence before proposing policy solutions.

Artificial Intelligence Moves to the Forefront

One particularly interesting portion of our discussion focused on artificial intelligence.

Professor Zywicki argued that AI presents both enormous opportunities and significant risks for consumer financial services. Among the issues likely to receive increasing attention are:

AI-assisted financial decision-making;
Consumer-authorized data sharing under Section 1033 of Dodd-Frank;
Data privacy and cybersecurity;
Authentication methods that move beyond traditional passwords;
Agentic AI capable of initiating financial transactions; and
Appropriate regulatory frameworks that encourage innovation without unnecessarily restricting competition.

Rather than beginning with the assumption that new technology should be tightly regulated, the Institute intends to examine whether markets remain competitive and whether technological developments ultimately benefit consumers.

Policy Issues Likely to Receive Immediate Attention

During the interview, Professors Zywicki and Miller identified several policy areas where they believe the Institute can have an immediate impact:

Interest rate caps and usury laws;
APR disclosures and widespread misunderstanding of APR as a measure of price;
Payment systems and interchange regulation;
Federal preemption and the future of dual banking;
Financial inclusion;
Stablecoin regulation; and
Emerging litigation involving consumer financial regulation.

The Institute has already begun preparing amicus briefs in significant cases involving consumer financial services and expects litigation support to become an increasingly important component of its work.

An Invitation to Debate

One aspect of the discussion that I found particularly noteworthy was the Institute’s stated commitment to engaging scholars from across the ideological spectrum. Both Professors emphasized that the Institute welcomes disagreement, provided it is grounded in rigorous empirical analysis rather than political advocacy. They also stressed that the Institute is not a consulting organization and will preserve its academic independence regardless of its funding sources.

Looking Ahead

Whether one agrees with every policy position advanced by Professors Zywicki and Miller or not, the Institute for Consumer Financial Choice is likely to become an influential participant in consumer financial services policy discussions over the coming years.

At a time when debates over CFPB authority, FinTech innovation, AI, digital payments, small-dollar lending, and consumer choice continue to intensify, an institution dedicated to empirical research and policy analysis is certain to attract attention from regulators, legislators, courts, industry participants, and consumer advocates alike.

The Institute’s long-term success will ultimately be measured not by the number of conferences it hosts or papers it publishes, but by whether its research meaningfully influences legislation, regulation, litigation, and public understanding of consumer financial services. Based on our conversation with Professors Zywicki and Miller, they have set ambitious goals and they appear determined to pursue them.

To listen to this episode, click here.

Consumer Financial Services Group

Is a ‘Private CFPB’ Emerging? Or Is a New Consumer Protection Ecosystem Taking Shape?

“Nature abhors a vacuum.” —Aristotle

The Consumer Financial Protection Bureau’s dramatic retreat from enforcement during 2025 and 2026 has created one of the most significant shifts in consumer financial services regulation since the Bureau opened its doors in 2011.

Much has been written about what the CFPB is no longer doing. Enforcement investigations have slowed dramatically. Numerous pending lawsuits have been dismissed or settled on terms markedly different from those sought by the prior administration. Supervision has been scaled back, the direction of rulemaking has changed significantly, and the Bureau’s priorities have shifted away from the aggressive enforcement agenda that characterized much of its existence.

Far less attention has been paid to what is replacing that federal enforcement presence.

At first glance, one might conclude that a “private CFPB” is emerging. But that description is probably too narrow. The more accurate characterization is that a decentralized consumer protection ecosystem is taking shape. Former CFPB officials are dispersing into public-interest law firms, nonprofit advocacy organizations, state attorneys general offices, state financial regulators, academia, and even cabinet-level state government positions. Working independently, and often in collaboration, they appear poised to pursue many of the same consumer protection objectives that previously were advanced primarily through the CFPB.

Whether this evolving network ultimately proves as influential as the CFPB remains to be seen. Nevertheless, one conclusion already seems warranted: the Bureau’s reduced enforcement presence should not be mistaken for a comparable reduction in enforcement risk.

Rohit Chopra Heads West

After being removed as CFPB Director in February 2025, Chopra remained active in consumer protection policy through public speaking, academic appearances, and commentary on the future of financial regulation. Earlier this year, California Governor Gavin Newsom appointed Chopra to serve as the inaugural Secretary of the newly created Business and Consumer Services Agency (BCSA), a cabinet-level agency that officially began operations on July 1, 2026.

The significance of Chopra’s appointment extends well beyond a change in title. The BCSA consolidates oversight of numerous state departments responsible for consumer protection, licensing, and business regulation, including the California Department of Financial Protection and Innovation (DFPI), the state’s increasingly influential financial services regulator. As Secretary, Chopra oversees an agency designed to coordinate regulatory and enforcement activities across a broad spectrum of California’s consumer-facing industries.

For the consumer financial services industry, the appointment is particularly noteworthy because California has steadily expanded its role in financial regulation in recent years, often positioning itself as a state counterpart to the CFPB. The DFPI possesses broad supervisory and enforcement authority over many financial service providers doing business in California, including entities that are not subject to traditional bank regulation. Chopra’s experience as both CFPB Director and an FTC Commissioner makes him uniquely qualified to lead this new regulatory “super agency.”

In many respects, Chopra’s appointment illustrates another facet of the broader trend discussed in this article. While many former CFPB officials have migrated into public-interest litigation, nonprofit advocacy, private practice, or academia, Chopra has assumed a position from which he can influence consumer protection policy at the state level. His move also underscores the increasingly important role that California is likely to play as federal consumer financial enforcement becomes more decentralized. An important factor is that consumer protection concepts that originate in California often spread to other states.

Private Civil Litigation Steps Up

Less attention has been paid to another important, and potentially long-lasting, development: the migration of many of the CFPB’s most experienced enforcement lawyers into public-interest organizations, nonprofit advocacy groups, impact litigation practices, and state enforcement partnerships.

The recent formation of Halperin Petersen & Mikkilineni LLP represents perhaps the clearest illustration of this trend, but it is only one component of a much larger movement. The founders of the firm are:

Eric Halperin—former CFPB Assistant Director for Enforcement
Cara Petersen—former CFPB Acting Assistant Director for Enforcement
Tara Mikkilineni—former CFPB senior Enforcement attorney

They have publicly stated that their mission is to partner with advocacy organizations and state attorneys general to pursue consumer protection and civil-rights litigation in areas where federal enforcement has receded.

The current movement did not emerge overnight.

Several prominent former CFPB officials established influential advocacy organizations years earlier, often in response to prior changes in federal enforcement priorities. Although these organizations were not created in response to the CFPB’s current retrenchment, they provide an important historical foundation for today’s expanding network of consumer advocacy organizations.

Deepak Gupta’s Gupta Wessler LLP demonstrated that former CFPB lawyers could build nationally recognized public-interest litigation practices. Likewise, the Student Borrower Protection Center, founded by former CFPB officials Seth Frotman, Mike Pierce, and Bonnie Latreille, demonstrated how former Bureau leaders could combine litigation, policy advocacy, coalition building, and public education to influence consumer financial services policy outside government.

The more recent formation of Protect Borrowers’ Strategic Litigation Project, and ultimately Halperin Petersen & Mikkilineni LLP, builds upon those earlier efforts but is unique in one important respect. It appears to be the first public-interest law firm established by multiple senior leaders of the CFPB’s Enforcement Division with the express objective of pursuing strategic litigation in areas where federal enforcement has receded.

A Decentralized Consumer Protection Ecosystem

Taken together, these developments reveal something more significant than the creation of a single public-interest law firm.

The emerging ecosystem includes:

Public-interest law firms, such as Halperin Petersen & Mikkilineni LLP;
Nonprofit advocacy organizations, including Protect Borrowers and the Student Borrower Protection Center;
Established public-interest appellate boutiques such as Gupta Wessler LLP;
State attorneys general;
State financial regulators, particularly California’s Department of Financial Protection and Innovation;
Former CFPB officials serving in senior state government positions, most notably Rohit Chopra’s leadership of California’s Business and Consumer Services Agency;
Consumer advocacy organizations such as the National Consumer Law Center and Public Citizen; and
Coordinated litigation partnerships among many of these organizations.

Viewed collectively, these institutions increasingly resemble an ecosystem rather than a hierarchy. Unlike the CFPB, there is no single leader, no centralized enforcement authority, and no federal supervisory power. Instead, expertise developed within the Bureau is being redistributed across a broad network of organizations capable of influencing consumer financial services law through litigation, state enforcement, public advocacy, and policy development.

Observations

Whether this emerging ecosystem ultimately succeeds is far from certain.

Private litigants and nonprofit organizations cannot issue Civil Investigative Demands. They cannot conduct supervisory examinations. They cannot seek federal civil money penalties payable to the United States Treasury. Nor do they possess the CFPB’s nationwide regulatory authority.

On the other hand, they do possess something equally significant: decades of collective experience investigating, litigating, and resolving complex consumer financial services matters.

Many of the lawyers and policymakers now leading these organizations designed the legal theories, investigative techniques, supervisory approaches, and enforcement strategies that shaped the CFPB from its inception. They understand the statutes, the markets, the industry participants, and the practical realities of consumer financial services litigation as well as anyone in the country.

Accordingly, while the CFPB itself may play a smaller role than it did only a few years ago, its expertise has not disappeared. Instead, it has been redistributed throughout an increasingly sophisticated network of public-interest organizations, nonprofit litigation groups, state attorneys general, state financial regulators, and private law firms.

The CFPB may be retreating from the center of the consumer financial services landscape. But the lawyers, policymakers, and enforcement philosophies that helped define the Bureau’s first 14 years remain very much in the field. For the consumer financial services industry, that may prove to be one of the CFPB’s most enduring legacies.

Richard J. Andreano, Jr., John L. Culhane, Jr. and Alan S. Kaplinsky

CFPB Director Nominee Brian Johnson Won’t Endorse Eliminating the CFPB

Testifying at his confirmation hearing, CFPB Director nominee Brian Johnson declined to endorse efforts to eliminate the agency.

Appearing before the Senate Banking, Housing and Urban Affairs Committee, Johnson said, “That is not my intention. The CFPB is a creature of statute.” He added, “My intention is to execute the law.”

He said that if he is confirmed, he will enforce the law, which includes the sections of Dodd-Frank dealing with the CFPB.

Johnson said he favors legislative changes to the agency but did not specify what changes he would like to see made.

Current Trump administration officials, including Acting CFPB Director Russell Vought, have endorsed elimination of the agency. Vought has endorsed Johnson for the job.

Following an executive session to vote on unrelated nominations, the committee considered Johnson’s nomination, as well as the choices of Abby Warren to serve as Assistant Secretary of the Department of Commerce, and Irving Dennis to serve as Chief Financial Officer of the Department of Housing and Urban Development.

In his opening statement, Johnson said, “Where the CFPB tries to remake markets according to an ideological agenda, it deprives consumers of choice, restricts their access to financial products and services and drives up costs for providers which are ultimately borne by consumers and investors.”

He said he has three priorities for the agency:

Protecting consumers, especially those vulnerable to fraud and scams.
Promoting accountability by ensuring that the Bureau operates prudently and within its statutory limits.
Modernizing CFPB operations.

Senate Banking, Housing and Urban Development Chairman Sen. Tim Scott, R-S.C., endorsed Johnson’s nomination. He said the bureau must be focused and concentrate on following the law. Referring to Johnson and the other nominees, he stated that each “brings a strong record of leadership and deep experience in the agency or policy area they have been nominated to serve. That experience matters.”

However, Committee ranking Democrat, Sen. Elizabeth Warren, D-Mass., said Johnson has his “unique baggage for the job”. She said that Johnson has been a well-paid “hired gun” for big banks and financial firms.

In a particularly interesting exchange, Sen. Warren asked, “Will you commit to notifying Congress and the Inspector General immediately if the White House contacts you about an enforcement action against a Trump family company or a big donor that cheated families?” Johnson replied that he disputed the premise of the question.

Sen. Warren asked whether the CFPB could continue its examinations if examiners are decreased from 350 to 77, Johnson said, “It depends on the CFPB’s examination strategy.”

Asked by Sen. Warren about overall staffing reductions proposed by the Trump administration, Johnson said those questions currently are tied up in court. He added, however, that he pledged to have an “open mind” when it comes to CFPB staffing. Under questioning from Senators, Johnson pledged to ensure that the Bureau protects military members.

The hearing marked the next significant step in the confirmation process for Johnson, who previously held senior leadership positions at the CFPB from December 2017 until March 2020, including as Acting Deputy and then as Deputy Director for a majority of that period. If confirmed by the Senate, Johnson would become the first Senate-confirmed CFPB Director of President Trump’s second administration.

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.

Addressing his prior public service, Johnson stated, “My experiences in these various roles have deepened my conviction that consumer protection is not a zero-sum game. Where the CFPB writes clear and durable rules of the road, obeys its own statutory bounds, justly enforces the law, and enables consumers to make their own financial decisions, both consumers and market participants win.”

Consumer Financial Services Group

Report: Russell Vought Expected to Remain at CFPB as Senior Adviser Pending Brian Johnson’s Confirmation

According to a report by Eleanor Mueller of Semafor, Russell Vought is expected to remain at the Consumer Financial Protection Bureau in a senior adviser role after his service as Acting Director ends on August 1, continuing until Brian Johnson is confirmed by the Senate and sworn in as CFPB Director.

Although the CFPB and the White House have not yet publicly confirmed the arrangement, the reported plan would provide continuity in the Bureau’s leadership during what has become one of the most consequential transition periods in the agency’s history.

The report comes as the CFPB continues to grapple with several significant issues, including pending litigation over the Bureau’s proposed reduction-in-force, implementation of the Bureau’s revised organizational structure, ongoing efforts to reconsider or rescind a number of regulations adopted during the Chopra administration, and the anticipated issuance of a final rule implementing Section 1033 of the Dodd-Frank Act governing consumer financial data rights.

A Practical Solution to an Unusual Transition

If the report proves accurate, the arrangement would make practical and legal sense.

Because Congress created the CFPB, only Congress can abolish it. While Acting Director Vought has dramatically reduced the Bureau’s enforcement activity, supervision, staffing, and budget during his tenure, the agency continues to perform a number of statutory responsibilities that require day-to-day management.

Keeping Vought at the Bureau in an advisory capacity would help avoid a leadership vacuum while Brian Johnson completes the confirmation process and assumes office.

The timing is particularly significant because the litigation challenging the CFPB’s proposed reduction in force remains pending. As readers of this blog know, the district court has stayed further proceedings to permit Johnson, if confirmed, to review the proposed staffing reductions and determine whether he wishes to modify, continue, or abandon the current plan before the litigation proceeds further.

What It May Signal

From a legal standpoint, Mark Paoletta, the current Deputy Director, will become the Acting Director as of August 1 when Russell Vought’s term as Acting Director expires. We would anticipate that the de facto acting director will continue to be Russell Vought on August 1 until Brian Johnson is confirmed and sworn in.

During Vought’s tenure, the administration pursued an aggressive effort to reduce the CFPB’s footprint by sharply curtailing enforcement, attempting to reduce staffing dramatically, settling or dismissing many pending enforcement matters, reducing the Bureau’s funding, and reconsidering numerous regulations adopted during the Biden administration.

Brian Johnson, by contrast, is widely expected to lead a more conventional Republican CFPB. While few observers expect a return to the aggressive regulatory and enforcement posture of former Director Rohit Chopra, Johnson’s background, including his prior service as the CFPB’s Deputy Director under Kathy Kraninger, his work on the House Financial Services Committee, and his private-sector experience, suggests a greater emphasis on stable management, targeted enforcement, and a more predictable regulatory agenda.

Indeed, during his recent Senate confirmation hearing, Johnson indicated that he intends to take a fresh look at the Bureau’s staffing needs, consistent with the district court’s direction in the pending litigation.

What to Watch

Several questions remain unanswered.

First, the Senate must still confirm Johnson. While his confirmation appears likely, the timing remains uncertain, particularly with the Senate’s August schedule.

Second, it remains to be seen precisely what responsibilities Vought would retain as a senior adviser and how actively he would participate in Bureau operations after August 1.

Finally, the transition may provide the first indication of how much continuity—or change—the financial services industry should expect under Johnson’s leadership. Industry participants will be watching closely for decisions regarding the reduction in force, supervision, enforcement priorities, pending rulemakings, and implementation of the CFPB’s surprisingly active regulatory agenda.

We will continue to monitor these developments and report on any official announcement from the White House or the CFPB, as well as any further information regarding the transition to Brian Johnson’s leadership.

Alan S. Kaplinsky, Richard J. Andreano, Jr., John L. Culhane, Jr. and Adam Maarec

Governor Sherrill Selects Christopher Peterson to Lead New Jersey Division of Consumer Affairs

Governor Mikie Sherrill has announced her intention to nominate Christopher L. Peterson, one of the nation’s best-known consumer protection scholars and former senior Consumer Financial Protection Bureau official, to serve as Director of the New Jersey Division of Consumer Affairs. Peterson will begin serving as Acting Director on August 3, pending his formal nomination and confirmation by the New Jersey Senate.

The appointment is significant not only for New Jersey, but also for the consumer financial services industry nationwide. The Division of Consumer Affairs is responsible for enforcing New Jersey’s Consumer Fraud Act, regulating the securities industry, and overseeing 51 professional licensing boards. Under Peterson’s leadership, we expect the Division to remain one of the country’s most active state consumer protection agencies.

We have known Chris well for many years through his active involvement in the American Bar Association’s Committee on Consumer Financial Services, a committee in which several members of Ballard Spahr’s Consumer Financial Services Group have long been active participants. Throughout that time, Chris has established himself as one of the country’s leading authorities on consumer financial services law.

Chris has also been a valued guest on our Consumer Finance Monitor Podcast on two occasions. On March 31, 2022 he joined Alan Kaplinsky to discuss the first several months of Rohit Chopra’s tenure as Director of the CFPB. Earlier, on February 13, 2020 he joined Alan to discuss the Veterans and Consumers Fair Credit Act.

In addition, Chris has been a featured speaker on several occasions at the Practising Law Institute’s Annual Consumer Financial Services Institute, one of the nation’s premier educational programs devoted to consumer financial services law. The Institute was founded by Alan Kaplinsky, who served as its Co-Chair for 25 years.

Simply put, we regard Chris as one of the smartest consumer financial services lawyers in the country. He has been a prolific author and speaker on virtually every major issue affecting consumer financial services providers, including consumer credit, mortgage lending, fintech, predatory lending, military lending protections, consumer protection law, and CFPB enforcement. Whether or not one agrees with all of his policy views, there is little question that he has had an enormous influence on the development of consumer financial services law over the past two decades.

Chris is also a longtime Fellow of the American College of Consumer Financial Services Lawyers, an honor reserved for lawyers who have achieved preeminence in the field through distinguished professional accomplishment, scholarship, and service.

Peterson’s appointment also reflects his impressive public service and academic credentials. For many years, he has been on the faculty at the University of Utah’s S.J. Quinney College of Law. While remaining on that faculty, he served as a senior advisor at the CFPB during the Bureau’s formative years, helping shape its enforcement strategy and policy initiatives. Later, he played an important role at the Department of Defense in strengthening protections for military families through the Military Lending Act.

What Should the Regulated Industry Expect?

We believe Chris will be a reasonable, thoughtful, but nevertheless strict enforcer of New Jersey’s Consumer Fraud Act. While he has consistently advocated for robust consumer protections throughout his career, he also possesses a sophisticated understanding of how consumer financial markets operate and the compliance challenges faced by legitimate businesses.

One area that bears particularly close watching is the Division’s recently issued guidance concerning so-called “junk fees.” Given Chris’s longstanding interest in transparency in consumer transactions, we expect enforcement in this area to remain a significant priority. Companies doing business in New Jersey should carefully review their fee disclosure practices and ensure that they comply with both the Consumer Fraud Act and the Division’s guidance.

Finally, although it is obviously too early to make predictions about future federal appointments, Chris’s experience as a former CFPB official, nationally recognized scholar, and respected consumer protection expert would undoubtedly make him a leading candidate to serve as Director of the CFPB should a Democrat next occupy the White House.

We congratulate Chris on this well-deserved appointment and wish him every success as he undertakes this important new public service role. We look forward to following the Division’s priorities and enforcement initiatives under his leadership.

We would be remiss if we didn’t note this as being part of the trend we just recognized of former CFPB lawyers joining state enforcement agencies or launching public interest private practices which are partially filling the consumer protection void created by the CFPB.

John L. Culhane, Jr. and Alan S. Kaplinsky

GAO Report Reinforces Trump Administration’s Regulatory Reform Agenda for the Banking Industry

The U.S. Government Accountability Office (GAO) recently issued a report recommending that the federal banking agencies adopt a more rigorous and transparent process for identifying and eliminating outdated, unnecessary, or unduly burdensome banking regulations. Although the report focuses on improving the agencies’ review process rather than recommending the repeal of any specific regulations, its conclusions align closely with the Trump administration’s broader effort to reduce regulatory burdens throughout the federal government.

The report, Bank Regulatory Reviews: Action Needed to Better Identify and Address Unnecessary or Unduly Burdensome Requirements, examines how the Federal Reserve Board (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have implemented their responsibilities under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). EGRPRA requires the agencies to review their regulations at least once every 10 years, solicit public comment, and identify rules that have become outdated, unnecessary, or excessively burdensome.

Agency Practice

For the most recent EGRPRA review, the agencies have grouped their regulations into 12 categories: applications and reporting; power and activities; international operations; consumer protection; directors, officers, and employees; money laundering; rules of procedure; safety and soundness; securities; banking operations; capital; and the Community Reinvestment Act. They have published four notices in the Federal Register soliciting comments on regulations that are outdated, unnecessary, or unduly burdensome, with each notice covering three categories of regulations. They have also held four outreach meetings inviting interested parties to provide their views on any of the categories of regulations.

Assuming the agencies follow the same process that they have used in the past, each agency’s staff will summarize the comments on their respective regulations and provide recommendations regarding those regulations. Each agency’s management will then make decisions on staff recommendations and submit a draft report covering its regulations to the lead agency (the Fed has typically been the lead agency). The lead agency will prepare a draft consolidated report and submit it to the other agencies for review. Once the agencies reach a consensus, the lead agency will submit the report to the FFIEC for a vote. Once approved, the FFIEC will submit a joint report to Congress and publish it in the Federal Register.

A Timely Report

The GAO report comes as the Trump administration has made regulatory reform one of its principal domestic policy objectives. Since returning to office, the administration has issued a series of Executive Orders directing agencies to reduce regulatory costs, eliminate unnecessary regulations, and ensure that agencies carefully assess both the benefits and the costs of existing and proposed rules. The administration has also emphasized that agencies should focus their resources on regulations that produce measurable public benefits while removing those that no longer serve their intended purpose.

Against that backdrop, GAO’s recommendations provide an independent endorsement of many of the principles underlying the administration’s regulatory reform agenda. Rather than advocating wholesale deregulation, GAO recommends that the banking agencies adopt a disciplined framework for determining whether existing regulations continue to be justified.

GAO’s Findings

GAO found that while the federal banking agencies have conducted the periodic reviews required by EGRPRA, they have not established documented procedures for determining when a regulation should be considered outdated, unnecessary, or unduly burdensome. Nor have they consistently documented how comments received from banks and other stakeholders influenced their decisions regarding whether regulatory changes were warranted.

GAO also found that the agencies have not consistently incorporated recognized best practices for retrospective regulatory review, including:

Prioritizing regulations that warrant review;
Performing cost-benefit analyses of existing regulations;
Evaluating the cumulative impact of multiple regulatory requirements on regulated institutions; and
Documenting how stakeholder comments affected agency decision-making.

According to GAO, without these practices, Congress, regulated institutions, and the public have little ability to assess whether the agencies’ periodic reviews are accomplishing Congress’s objective of reducing unnecessary regulatory burdens.

GAO’s Recommendations

GAO recommends that each of the three federal banking agencies:

Develop written procedures for identifying outdated, unnecessary, or unduly burdensome regulations and determining what actions should be taken; and
Incorporate leading practices for retrospective regulatory review, including prioritization methodologies, cost-benefit analyses, and assessments of cumulative regulatory burden.

Notably, the agencies neither fully embraced nor rejected GAO’s recommendations, instead describing the steps they have already taken in conducting the current EGRPRA review.

Implications for the Banking Industry

The report could prove significant because it provides an analytical framework that may support future regulatory initiatives by the banking agencies. If the agencies implement GAO’s recommendations, regulated institutions may have greater opportunities to persuade regulators that longstanding requirements should be modified or repealed based on changed market conditions, technological developments, or accumulated compliance costs.

The report also lends support to industry arguments that regulators should evaluate the cumulative effects of multiple regulations rather than considering each rule in isolation. Over the past decade, banks and trade associations have frequently argued that the aggregate compliance burden imposed by overlapping supervisory expectations, guidance, and regulations has materially increased operating costs without always producing corresponding supervisory benefits.

Looking Ahead

Whether the banking agencies ultimately implement GAO’s recommendations remains to be seen. Much may depend on the extent to which the agencies embrace the administration’s broader regulatory philosophy. The OCC, FDIC, and Fed now have an opportunity to demonstrate that the periodic reviews mandated by EGRPRA can become more than simply a procedural exercise.

If the agencies adopt the structured review process recommended by GAO, regulated institutions could see a more systematic examination of legacy regulations, greater transparency regarding agency decision-making, and increased opportunities to advocate for regulatory modernization.

Our Take

Although GAO’s report is technical in nature, its implications extend well beyond the mechanics of EGRPRA. The report reinforces a central premise of the Trump administration’s regulatory reform agenda: agencies should periodically justify the continued existence of their regulations rather than assuming that rules adopted years, or even decades, ago remain appropriate indefinitely.

For banks and other financial institutions, the report offers reason for cautious optimism. It does not promise widespread deregulation, nor does it recommend the elimination of any particular rule. Instead, it calls for a more disciplined, evidence-based process that could ultimately lead to a regulatory framework that is more efficient, more transparent, and better aligned with current market realities.

Consumer financial services providers should closely monitor how the federal banking agencies respond. If GAO’s recommendations are implemented, the current EGRPRA review may become an important vehicle for meaningful regulatory modernization and burden reduction—objectives that are likely to remain central to the administration’s financial regulatory agenda.

Alan S. Kaplinsky, John L. Culhane, Jr. and Richard J. Andreano, Jr.

Federal Banking Agencies Adopt Coordinated Approach to Protect Highly Sensitive Information During Bank Examinations

The federal banking agencies, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, have issued a joint statement establishing a coordinated approach for the handling of highly sensitive information during bank examinations. While the statement does not impose new supervisory expectations, it represents an important acknowledgment that the examination process itself can create cybersecurity and information security risks if highly sensitive information is not handled appropriately.

Why the Statement Was Issued

The agencies recognize that financial institutions increasingly maintain information whose unauthorized disclosure could have serious consequences not only for the institution itself but also for its customers and the stability of the financial system. As cyber threats continue to grow in sophistication, the traditional practice of routinely transmitting large volumes of sensitive information to regulators has come under increased scrutiny.

The joint statement seeks to strike a balance between two important objectives:

Ensuring that examiners continue to have timely access to information needed to perform effective supervision; and
Minimizing the cybersecurity risks associated with collecting, transmitting, storing, and accessing highly sensitive information.

A Risk-Based, Flexible Approach

Rather than prescribing a single method for providing examination materials, the agencies describe a flexible, risk-based framework.

The statement provides that banks and examiners should work together to identify information that should be treated as “highly sensitive.” At the beginning of an exam, the examiners are to notify the bank that management may identify to examiners any information considered highly sensitive. They are also to explain the process the bank may follow to escalate any concerns management may have about the identification and handling of that information.

The onus is then on bank management to identify all data and documents considered highly sensitive, to discuss their concerns with the examiner-in-charge or their primary agency contact, and to raise those concerns with more senior officials, if necessary. Once identified, the agencies may employ a variety of alternatives designed to reduce unnecessary collection or storage of such information.

Among the approaches specifically identified are:

On-site review of documents rather than transferring copies to agency systems;
Direct digital access to information maintained on the institution’s own systems;
Review of redacted or summarized documents where appropriate; and
Other enhanced safeguards governing the transmission and access of sensitive information.

Importantly, the agencies emphasize that the appropriate method will depend on the nature of the information and the circumstances of the particular examination.

Commitment to Prompt Data Breach Notification

Perhaps the most noteworthy aspect of the statement is the agencies’ commitment regarding cybersecurity incidents affecting supervisory information.

The agencies state that they will notify an affected supervised institution as soon as practicable, and no later than 72 hours after discovering a potential or confirmed material data breach involving confidential supervisory information of the affected institution.

The 72-hour clock begins running once the agency has a reasonable basis to believe information has been compromised and has identified the appropriate institution. The commitment is subject to “applicable legal considerations,” a phrase the agencies do not define.

Although many financial institutions already operate under various breach-notification requirements, this commitment is significant because it establishes a reciprocal obligation on the part of the federal banking agencies themselves.

Practical Implications for Financial Institutions

Although the statement expressly notes that it creates no new regulatory expectations, supervised institutions should nevertheless consider whether their examination preparation processes remain appropriate.

Banks may wish to:

Identify categories of information that should be designated as highly sensitive before an examination begins;
Establish internal protocols for discussing handling procedures with examination teams;
Evaluate whether on-site review or direct system access may be preferable for certain categories of information;
Review internal procedures governing the transmission of confidential supervisory information; and
Ensure that personnel responsible for regulatory examinations understand the new framework.

Advance planning should help minimize delays during examinations while reducing cybersecurity risks.

Looking Ahead

The joint statement is another indication that federal banking regulators are incorporating cybersecurity considerations into every aspect of the supervisory process, not merely into examinations of banks’ own cybersecurity programs.

It also reflects a broader regulatory trend toward risk-based supervision. Rather than requiring a one-size-fits-all approach to information sharing, the agencies acknowledge that different categories of information warrant different levels of protection and that examination practices should adapt accordingly.

While the guidance currently applies only to examinations conducted by the federal banking agencies, other financial regulators may ultimately adopt similar practices as concerns over cybersecurity and protection of confidential information continue to grow.

For supervised institutions, the message is clear: effective supervision and strong information security are no longer competing objectives, they are complementary ones.

John L. Culhane, Jr. and Alan S. Kaplinsky

Oregon Proposes Guidance Requiring Nonbank BNPL Providers and Service Providers to Obtain State Lending Licenses

The Oregon Department of Consumer and Business Services, Division of Financial Regulation (DFR), has proposed to issue Bulletin No. DFR 2026-X, reminding nonbank “Buy Now, Pay Later” (BNPL) companies and BNPL service providers that they generally must obtain Oregon lending licenses before offering BNPL products to Oregon consumers. Unlike a few other states, Oregon has not enacted a statute that specifically applies to BNPL companies and service providers. The Bulletin is generally consistent with prior informal advice received from the DFR.

The Bulletin is noteworthy because it rejects several arguments that BNPL providers have advanced in other jurisdictions regarding the applicability of state lending laws. According to the DFR, licensing obligations apply regardless of whether the BNPL product is described as a nonrecourse loan or does not impose interest, fees, or other charges at the time of the initial purchase.

Oregon Distinguishes Between Two Licensing Regimes

The Bulletin explains that the applicable licensing requirement depends primarily on the repayment term of the BNPL product.

Payday lender license. BNPL loans of $50,000 or less with repayment terms of 60 days or less, or loans payable on demand within 60 days, are subject to Oregon’s Payday Loan Law (ORS Chapter 725A).

Consumer finance lender license. BNPL loans or lines of credit with periodic payments extending beyond 60 days are subject to Oregon’s Consumer Finance Act (ORS Chapter 725).

In both cases, the licensing requirement extends beyond the lender itself to include persons acting as agents, brokers, or facilitators.

DFR Concludes That BNPL Products Are “Loans”

Because Oregon’s lending statutes do not define the term “loan,” the DFR looks to dictionary definitions and Oregon case law. Relying on those authorities, the Bulletin concludes that a loan is simply an advance of money accompanied by an obligation to repay in the future.

The DFR observes that BNPL products allow consumers to obtain goods immediately while repaying the obligation over time through scheduled installments. As a result, the agency concludes that BNPL transactions fall within the ordinary meaning of a loan under Oregon law.

The Bulletin discusses the now-common “Pay in Four” product, under which consumers typically pay 25% of the purchase price upfront followed by three equal payments every two weeks. Although these products frequently do not charge interest, the DFR notes that they often include late fees, require automatic payments, may report delinquencies to consumer reporting agencies, and may result in collection activity if consumers default.

“Nonrecourse” Characterization Does Not Avoid Licensing

One of the more significant aspects of the Bulletin is the DFR’s rejection of the argument that describing a BNPL transaction as “nonrecourse” removes it from Oregon’s licensing statutes.

The DFR explains that a traditional nonrecourse loan generally involves collateral, such as a home or automobile, that the lender may repossess instead of pursuing the borrower personally. In contrast, BNPL transactions financing ordinary retail purchases do not fit within that traditional concept.

Accordingly, labeling a BNPL product as “nonrecourse” does not eliminate the licensing requirements imposed by either Oregon’s payday lending or consumer finance statutes.

Merchant-Funded BNPL Programs Also Require Licensing

The Bulletin also addresses licensing exemptions contained in Oregon’s Consumer Finance Act.

The DFR concludes that nonbank BNPL providers generally are not eligible for those exemptions where a retailer pays the BNPL provider to offer financing to the retailer’s customers. According to the Bulletin, the retailer’s payment constitutes consideration supporting the consumer finance loan, thereby disqualifying the provider from relying on the statutory exemption.

This interpretation is significant because many BNPL business models depend on merchant discount fees rather than consumer-paid finance charges.

Service Providers May Also Need Licenses

Another important feature of the Bulletin is its broad interpretation of who must be licensed.

The DFR emphasizes that Oregon’s licensing statutes apply not only to lenders but also to agents, brokers, and facilitators. The Bulletin points to statutory definitions encompassing entities that process applications, transmit payments, or materially assist in making consumer finance loans. With respect to servicing activity, the Bulletin appears to conflict with long-standing guidance that such activity does not require a license.

Consequently, technology companies, payment processors, platform providers, and other participants supporting BNPL programs should carefully evaluate whether their activities require Oregon licensure.

Practical Implications

The Oregon Bulletin reflects the continuing trend among state regulators to treat BNPL products as traditional consumer credit products rather than as novel payment arrangements falling outside existing lending laws.

Companies offering BNPL products nationwide should carefully review Oregon’s guidance and evaluate whether their existing licensing strategies adequately address the State’s interpretation of its lending statutes. In particular, companies should determine:

Whether repayment terms trigger Oregon’s payday lending or consumer finance licensing requirements;
Whether affiliates or service providers could be considered agents, brokers, or facilitators;
Whether merchant-funded business models affect eligibility for licensing exemptions; and
Whether existing Oregon operations should be licensed through the Nationwide Multistate Licensing System (NMLS).

Status of Proposal

The public comment period closed on July 17, 2026. It will be interesting to see whether the DFR modifies its analysis in response to comments submitted by industry participants before issuing a final bulletin. Given the significance of the issues raised and the potentially broad impact on BNPL providers and service providers, changes to the final bulletin would not be surprising.

Our Observations

While the Bulletin is comprehensive, it raises several legal and policy questions.

First, the DFR appears to be attempting to fit a square peg into a round hole. For a detailed explanation as to why that is true, see the comment letter submitted by the American Fintech Council to DFR. Oregon’s payday lending and consumer finance statutes were enacted long before the emergence of modern BNPL products. Those statutes were designed to regulate traditional short-term cash advances and installment loans, not merchant point-of-sale financing products that often charge no interest and derive their revenue primarily from merchant fees. Rather than asking whether the Oregon Legislature intended either statutory framework to encompass BNPL products, the Bulletin reasons that because BNPL involves an advance of money with an obligation to repay, it necessarily must fit within one of the two existing licensing statutes. That conclusion is hardly self-evident.

Second, the Bulletin relies heavily on dictionary definitions of terms such as “loan,” “agent,” and “purchase money loan.” Resorting to dictionary definitions is an accepted tool of statutory construction where a statute does not define a term. However, courts generally do not stop there. They also consider statutory context, legislative purpose, legislative history, related statutory provisions, and the practical consequences of competing interpretations. The Bulletin gives comparatively little attention to those considerations.

Third, the DFR largely dismisses the significant economic differences between traditional payday lending and BNPL products. Payday loans typically involve the extension of cash, carry extremely high annual percentage rates, and are frequently associated with repeat borrowing. By contrast, the most common Pay-in-Four BNPL products finance a single retail purchase, generally do not charge interest, amortize automatically over four payments, and are funded economically through merchant discount fees rather than consumer finance charges. Those differences have prompted several legislatures to enact BNPL-specific legislation rather than attempting to shoehorn BNPL into existing lending statutes.

Fourth, the Bulletin explains why characterizing a BNPL product as “nonrecourse” does not eliminate licensing obligations, but it does so by mischaracterizing how that term is used with BNPL products. BNPL products are typically unsecured. A nonrecourse BNPL product is one where the buyer has no legal obligation to repay the creditor. It can also be one where the creditor cannot recover from the merchant either. It is not one where the creditor can repossess collateral following a payment default. While the buyer may feel a moral obligation to repay, the DFR fails to explain why that moral obligation to repay, in and of itself, should trigger licensing.

Fifth, the Bulletin concludes that merchant payments to BNPL providers constitute “consideration” that precludes reliance on certain statutory licensing exemptions. Although that interpretation is plausible, the Bulletin offers little analysis beyond the bare assertion that merchant compensation constitutes consideration. Given the widespread use of merchant-funded payment models throughout the payments ecosystem, a more robust statutory analysis would have been helpful.

Sixth, the DFR’s interpretation of “purchase money loan” is open to question. The Bulletin relies principally on a dictionary definition stating that a purchase money loan is secured by the property purchased. Many commercial lawyers, however, would understand purchase-money financing more broadly as financing used to acquire specific goods, whether or not the creditor ultimately retains a security interest. The Bulletin does not engage with those broader commercial law concepts.

Seventh, the Bulletin adopts an expansive interpretation of “agent,” “broker,” and “facilitator” that could require licensing not only of lenders but also of technology companies, payment processors, platform providers, and other service providers that materially assist in BNPL programs. That interpretation could significantly expand the scope of Oregon’s licensing laws beyond what many market participants have historically understood.

Finally, the Bulletin arguably goes beyond merely interpreting existing statutes and instead establishes what amounts to a comprehensive regulatory framework for BNPL products. It specifies which BNPL products require licenses, interprets statutory exemptions narrowly, expands the categories of entities requiring licensure, and addresses the legal significance of merchant-funded and nonrecourse structures. Critics are therefore likely to argue that these are policy determinations more appropriately made by the Oregon Legislature or through formal rulemaking rather than through interpretive guidance.

The Oregon Bulletin illustrates the growing tension between decades-old consumer lending statutes and rapidly evolving payment technologies. Rather than asking the Legislature to enact BNPL-specific legislation—as a number of states have done—the Division has attempted to fit BNPL products into existing payday lending and consumer finance statutes through an expansive interpretation of terms such as “loan,” “agent,” and “purchase money loan.” Whether courts ultimately agree with that approach remains to be seen. Although agencies are entitled to interpret ambiguous statutes, there is a meaningful difference between interpreting existing law and effectively creating a new regulatory regime for an innovative financial product. Critics are likely to argue that the Bulletin crosses that line by stretching statutes enacted long before BNPL existed to reach products that differ in important economic and operational respects from the payday and installment loans those statutes were originally designed to regulate. Such policy choices, they may contend, are better left to the Oregon Legislature than accomplished through administrative guidance.

John L. Culhane, Jr., Alan S. Kaplinsky and John D. Socknat

Plaintiffs’ Reply Brief Urges 10th Circuit to Preserve Preliminary Injunction Against Colorado’s DIDMCA Opt-Out Law

As we have previously reported, the en banc Tenth Circuit is considering National Association of Industrial Bankers v. Weiser, the closely watched case involving Colorado’s effort to use Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”) to apply its interest-rate caps to loans made by out-of-state, state-chartered banks to Colorado borrowers.

Following the court’s request for supplemental briefing, the plaintiffs-appellees, the National Association of Industrial Bankers and other two industry trade associations, have now filed their reply brief responding to Colorado’s supplemental submission. The reply brief doubles down on what has been the plaintiffs’ central theme throughout the litigation: Section 525 permits a state to opt out of DIDMCA only with respect to loans made by state banks located within that state, not loans made by state banks located elsewhere.

The Core Issue Remains: Where Is a Loan “Made”?

According to the plaintiffs, Colorado’s interpretation depends upon giving the phrase “loans made in such State” a meaning entirely different from the identical concept used elsewhere in DIDMCA and throughout federal banking law.

The brief argues that Section 521 authorizes a state-chartered bank to charge the interest rate permitted by the laws of the state “where the bank is located.” Section 525, the plaintiffs contend, merely allows a state to reject that federal parity regime for loans made by its own state-chartered banks. It does not authorize an opt-out state to regulate loans made by state banks chartered in other states.

The plaintiffs maintain that reading Sections 521 and 525 together leads to only one conclusion: a loan is “made” where the lending bank performs its lending functions, not wherever the borrower happens to reside or sign loan documents.

Colorado’s Reading Creates an Internal Contradiction

The reply brief argues that Colorado improperly divorces Section 525 from the very statutory provision it modifies.

According to the plaintiffs, Colorado asks the court to interpret “loans made” one way in Section 521 (where the bank is located), but an entirely different way in Section 525 (where the borrower resides or executes the loan documents).

The plaintiffs argue that Congress would not have used the same concept in adjoining provisions to mean two different things absent a clear indication that it intended to do so.

The brief also points to Congress’s use of different language in the National Housing Act, enacted only three months before DIDMCA. There, Congress referred to loans “made or executed” in a state. The plaintiffs argue that this demonstrates Congress knew how to focus on the borrower’s location when it wished to do so but deliberately chose not to use that language in Section 525.

Marquette and Longstanding Banking Law

The reply brief relies heavily on the Supreme Court’s decision in Marquette National Bank v. First of Omaha Service Corp., arguing that interstate lending has long been understood to occur at the location of the lending bank even when borrowers obtain credit remotely.

The plaintiffs contend that nothing in DIDMCA altered that understanding.

They also argue that numerous federal banking statutes consistently use the terms “make” or “made” to describe the lender’s conduct rather than that of the borrowers.

Competitive Parity Is a Central Theme

Perhaps the most significant policy argument advanced in the reply brief concerns competitive parity.

The plaintiffs note that Colorado concedes it cannot regulate interest rates charged by out-of-state national banks because of Section 85 of the National Bank Act.

If Colorado’s interpretation of Section 525 were accepted, however, only out-of-state state-chartered banks would lose the ability to export their home-state interest rates into Colorado, while national banks would remain unaffected.

According to the plaintiffs, this would destroy one of DIDMCA’s principal objectives—placing state-chartered banks on equal competitive footing with national banks, which is expressly set forth in the language of Section 521.

The brief repeatedly characterizes Colorado’s interpretation as creating discrimination against out-of-state state banks while leaving national banks untouched.

Legislative History

The plaintiffs also return to the legislative history discussed in their earlier briefs.

They argue that Section 525 was modeled almost verbatim on earlier federal opt-out provisions that were designed to address federalism concerns by allowing states to continue regulating the interest rates charged by their own state-chartered banks.

In their view, nothing in the legislative history suggests Congress intended Section 525 to authorize one state to regulate banks chartered by another state.

Rather, they argue that the opt-out provision was intended simply to permit each state to decide whether its own banks would receive the benefits of DIDMCA’s federal interest-rate provisions.

Regulatory Guidance

The plaintiffs also emphasize that federal banking regulators have long interpreted Section 525 as focusing on where the bank makes the loan rather than where the borrower resides.

The brief cites FDIC and former Office of Thrift Supervision interpretive letters dating back to the early 1980s, as well as the FDIC’s amicus brief in Greenwood Trust, all of which concluded that a state’s DIDMCA opt-out does not affect loans made by out-of-state banks merely because the borrower resides in the opt-out state.

The plaintiffs acknowledge an FDIC interpretive letter issued in 1988, but argue that Colorado overreads it. According to the plaintiffs, the 1988 letter merely recognized that determining where a loan is made may require a functional factual analysis in unusual circumstances; it did not endorse the proposition that every loan is made wherever the borrower is located.

Our Observations

The plaintiffs’ reply brief presents a cohesive textual argument that Section 525 cannot be read in isolation from Section 521 and that the phrase “loans made in such State” must carry the same meaning throughout DIDMCA.

Particularly noteworthy is the emphasis on competitive parity. The plaintiffs repeatedly argue that Colorado’s interpretation would produce the anomalous result that out-of-state national banks could continue exporting their home-state interest rates into Colorado, while similarly situated out-of-state state-chartered banks could not. That, they contend, is precisely the competitive imbalance DIDMCA was enacted to eliminate.

The reply brief also attempts to neutralize Colorado’s reliance on consumer-protection policy. The plaintiffs maintain that whatever the merits of Colorado’s policy objectives, those concerns cannot override the statutory text adopted by Congress. In their view, Section 525 was designed to preserve state authority over a state’s own chartered institutions, not to allow one state to regulate the lending activities of state banks chartered elsewhere.

The en banc court therefore faces two sharply competing visions of Section 525. Colorado and its supporting amici argue that the statute confers broad state authority to protect resident borrowers from high-cost loans made by out-of-state state-chartered banks. The plaintiffs, supported by numerous banking industry amici and by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, argue that Congress adopted a lender-location rule that preserves competitive parity between state and national banks while limiting each state’s usury authority to its own chartered institutions.

The en banc court’s resolution of that disagreement will become the most important interpretation of DIDMCA’s Section 525 since the statute’s enactment in 1980, with significant implications for interstate lending and bank-fintech partnerships nationwide.

With the filing of plaintiffs’ reply brief, the briefing is now complete. Oral argument before the en banc Court will take place on August 18, 2026.

Alan S. Kaplinsky and Burt M. Rublin

FDIC Files Amicus Brief Supporting Preliminary Injunction Against Oregon’s DIDMCA Opt-Out Law

The Federal Deposit Insurance Corporation (“FDIC”) filed an amicus brief supporting the motion for a preliminary injunction filed by the National Association of Industrial Bankers (“NAIB”), the Online Lenders Alliance (“OLA”), and the American Financial Services Association (“AFSA”) in their challenge to Oregon’s recently enacted opt-out law. The FDIC explains that it has a substantial institutional interest in the case because it administers and enforces the Federal Deposit Insurance Act, including Sections 521 and 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”), the statutory provisions at the center of the litigation.

According to the FDIC, Oregon’s interpretation of its opt-out statute conflicts with DIDMCA’s text, structure, context, and purpose, is inconsistent with Congress’s intent, departs from contemporaneous federal regulatory guidance, and threatens the continued vitality of the nation’s dual banking system.

The brief emphasizes that Congress enacted Section 521 of DIDMCA to place state-chartered, FDIC-insured banks on an equal footing with national banks by permitting them to export the interest rates permitted by the laws of the state where the bank is located. Section 525, in turn, created only a narrow exception permitting a state to opt out with respect to “loans made in such State.” According to the FDIC, for more than four decades the banking industry and federal regulators have understood that the relevant inquiry under Section 525 focuses on where the bank makes the loan—not where the borrower resides.

The FDIC argues that Oregon’s statute fundamentally alters that understanding by treating a loan as “made” in Oregon based on the borrower’s residence or domicile. According to the agency, that borrower-focused approach effectively gives Oregon extraterritorial authority over loans originated by state banks chartered and located in other states and would substantially undermine the parity Congress sought to establish between state-chartered and national banks.

Perhaps most significantly, the FDIC relies heavily on its own historical interpretations of DIDMCA. The agency points to interpretive letters it issued in 1983 and 1988, as well as an amicus brief it filed in the First Circuit in 1992, all of which concluded that a state’s decision to opt out under Section 525 does not authorize it to apply its usury laws to loans made by state banks located outside the opt-out state merely because the borrower resides in the opt-out state. The FDIC also cites guidance from the former Federal Home Loan Bank Board and the Office of the Comptroller of the Currency that reached similar conclusions.

The brief is also notable for addressing the FDIC’s own shifting litigation position in the Colorado DIDMCA opt-out litigation. The agency acknowledges that it previously filed amicus briefs expressing a different interpretation of Section 525, but explains that it subsequently withdrew those briefs because they did not reflect the most natural reading of the statute and departed from the FDIC’s contemporaneous interpretations issued in the years much closer to DIDMCA’s enactment. The FDIC further argues that those earlier contemporaneous interpretations deserve greater persuasive weight under the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo.

The FDIC further argues that its longstanding General Counsel Opinion No. 11 confirms that where a loan is “made” depends upon where the bank performs its core lending functions, including loan approval, extension of credit, and disbursement of loan proceeds, not on the borrower’s residence. According to the agency, Oregon’s interpretation would create uncertainty, impose substantial operational burdens on interstate lending, and allow one state’s policy choices to interfere with the regulatory decisions made by other states that have elected not to opt out of DIDMCA.

The FDIC’s participation substantially strengthens the plaintiffs’ request for preliminary injunctive relief. Courts frequently accord considerable weight to the views of the federal agency charged with administering the statute at issue, particularly where, as here, the agency grounds its position in the statutory text, legislative history, and decades of administrative interpretations. The filing also underscores the national importance of the issues presented, which overlap with those currently pending before the en banc U.S. Court of Appeals for the Tenth Circuit in the Colorado DIDMCA opt-out litigation in which the FDIC recently submitted a similar amicus brief.

We will continue to monitor the Oregon litigation and report on additional amicus filings, Oregon’s opposition to the preliminary injunction motion (due August 11), any injunction hearing that gets scheduled by the Court, and the district court’s ruling on the plaintiffs’ request for preliminary injunctive relief.

Briefing in the Colorado en banc proceedings before the Tenth Circuit is complete and oral argument before the en banc court has been scheduled for August 18, 2026.

Ballard Spahr represents the plaintiff trade associations in the Oregon case and the amici consortium of other trade associations in the Colorado case.

Alan S. Kaplinsky and Burt M. Rublin

Banking Industry Trade Associations File Comprehensive Amicus Brief Supporting Plaintiffs’ Challenge to Oregon’s Overbroad DIDMCA Opt-Out

A significant amicus brief was filed yesterday by many bank industry trade associations in the U.S. District Court for the District of Oregon in National Association of Industrial Bankers v. O’Day. This case challenges Oregon House Bill 4116’s attempt to utilize the state’s opt-out from Sections 521 through 523 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”) as a basis to regulate interest rates charged by out-of-state state banks.

This amicus brief was submitted by an impressive coalition consisting of the American Bankers Association (“ABA”), the Bank Policy Institute (“BPI”), the Consumer Bankers Association (“CBA”), and 51 state bankers associations. The breadth of the support is noteworthy. In addition to the three leading national banking trade associations, virtually every state bankers association in the country joined the filing, underscoring the industry’s view that the Oregon law presents issues with nationwide implications for the dual banking system and interstate lending.

The amici explain that their members include numerous FDIC-insured, state-chartered banks headquartered outside Oregon that regularly make loans to Oregon borrowers in reliance on DIDMCA’s interest-rate exportation authority. According to the brief, Oregon’s interpretation of its DIDMCA opt-out threatens lending programs relied upon by financial institutions throughout the country.

The amici support the plaintiffs’ statutory arguments and emphasize that they are filing separately to expand upon those arguments and to highlight two broader policy considerations that, in their view, demonstrate why Oregon’s interpretation of DIDMCA cannot be reconciled with the statute.

“Loans Made In” a State Refers to the Bank’s Location, Not the Borrower’s

The centerpiece of the brief is its textual analysis of DIDMCA. The trade associations argue that Section 525 permits a state to opt out of DIDMCA’s preemption only with respect to loans “made in” that state. They contend that the phrase necessarily focuses on the state where the bank makes the loan, not on the location or residence of the borrower.

The brief argues that this reading is confirmed by several considerations:

Section 521 itself ties permissible interest rates to the state “where the bank is located.”
Congress borrowed the operative language in Section 521 from Section 85 of the National Bank Act.
The Supreme Court’s decision in Marquette National Bank v. First of Omaha Service Corp. treated loans as being made where the bank conducts its lending operations, even when borrowers reside elsewhere.
Numerous other provisions throughout the federal banking laws consistently use the phrase “make a loan” to describe the lender’s conduct, rather than the borrower’s.
The legislative history of DIDMCA and its predecessor statutes demonstrates that Congress intended to preserve competitive equality between state-chartered and national banks while allowing states to regulate only their own institutions.

The amici also point out that the district court in the Colorado Weiser opt-out litigation adopted the same lender-focused interpretation. As the brief notes, the Tenth Circuit has scheduled en banc argument for August 18, 2026.

Oregon’s Interpretation Would Undermine the Dual Banking System

The brief devotes substantial attention to the broad consequences of Oregon’s position.

Congress enacted DIDMCA specifically to eliminate competitive disadvantages facing state-chartered banks while preserving the nation’s dual banking system. Oregon’s interpretation, they argue, would reverse that balance by allowing one state to regulate loans made by state banks chartered in other states while national banks would remain free to export their home states’ interest rates under Section 85 of the National Bank Act.

The trade associations contend that this would recreate precisely the competitive disparity DIDMCA was enacted to eliminate. If additional states adopted Oregon’s approach, the amici argue, many state-chartered banks could face increasing pressure to convert to national bank charters in order to avoid inconsistent state regulation, thereby weakening the dual banking system that Congress sought to preserve.

The brief also emphasizes what it views as Oregon’s unprecedented assertion of exterritorial authority. In particular, it notes that HB 4116 applies even to loans made by out-of-state state banks to Oregon borrowers who are not present in Oregon when the loan is made, so long as the borrower’s repayment is made through an Oregon financial institution.

Claimed Benefits to Consumers Are Also Questioned

The trade associations also challenge Oregon’s assertion that the legislation protects consumers.

First, they argue that consumer protection was not the purpose of DIDMCA’s opt-out provision. Rather, Congress included Section 525 to preserve state authority over banks chartered by the opting-out state.

Second, the amici argue that Oregon’s law will not eliminate higher-rate lending because national banks will continue to enjoy their own federal interest-rate exportation authority under the National Bank Act.

Finally, the brief cites economic research concluding that strict interest-rate caps frequently reduce credit availability for higher-risk borrowers while encouraging lenders to adopt alternative pricing mechanisms, such as higher annual fees. According to the amici, the likely result would be reduced competition, diminished access to credit, and potentially higher borrowing costs for many Oregon consumers.

Our Take

This filing demonstrates overwhelming industry support for the plaintiffs’ challenge. The participation of the ABA, BPI, CBA, and virtually every state bankers association demonstrates that the banking industry views the Oregon litigation as extending well beyond a dispute over one state’s lending law.

The brief also complements the amicus briefs filed by the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency, which both focused primarily on the statutory interpretation of DIDMCA and the preservation of competitive parity between state and national banks. By contrast, the trade associations devote considerably more attention to the practical consequences for the dual banking system and to the economic effects Oregon’s expanded opt-out would have on interstate lending and consumer credit markets.

Taken together with the amicus briefs submitted by the FDIC, OCC, and a coalition of 15 state attorneys general, the trade association brief highlights the broad range of governmental and industry stakeholders urging the district court to preliminarily enjoin enforcement of Oregon’s DIDMCA opt-out while the litigation proceeds.

Ballard Spahr represents the plaintiff trade associations in the Oregon case and the amici consortium of other trade associations in the Colorado case.

Alan S. Kaplinsky and Burt M. Rublin

Federal Reserve Board and FDIC Propose to Modernize Insider Lending Rules by Updating Regulation O Thresholds

The Federal Reserve Board and the Federal Deposit Insurance Corporation have issued substantially identical notices of proposed rulemaking to modernize the regulations governing extensions of credit by banks to their executive officers, directors, principal shareholders, and their related interests. Because the agencies supervise different categories of insured depository institutions, each is proposing amendments to its own regulations, although the proposals are virtually identical in substance.

The proposals represent another step in the federal banking agencies’ broader effort to eliminate outdated regulatory requirements that have not kept pace with inflation, economic growth, and the evolution of the banking industry.

Which Institutions Are Covered?

Because the Federal Reserve Board’s proposal would amend Regulation O, which applies directly to state-chartered banks that are members of the Federal Reserve System and is incorporated by reference in the OCC’s regulations governing insider lending by national banks, federal savings associations, and federal branches and agencies of foreign banks, and the FDIC’s proposal would apply to state-chartered nonmember banks, foreign banks having an insured branch, and state savings associations, the separate proposals cover the entire banking industry.

The Statutory Framework

The restrictions on insider lending originate in sections 22(g) and 22(h) of the Federal Reserve Act. Those provisions were enacted to prevent preferential lending and conflicts of interest involving bank insiders.

Importantly, Congress did not establish the applicable dollar thresholds in the statute itself. Instead, sections 22(g) and 22(h) expressly authorize the appropriate federal banking agencies to prescribe those thresholds by regulation, but the agencies have not amended their respective rules since 1979.

Not All Insider Loans Are Subject to the Same Restrictions

Although Regulation O is often described broadly as governing loans to bank insiders, it does not treat every type of extension of credit the same.

The statute generally prohibits banks from extending credit to their executive officers except in limited circumstances expressly authorized by Congress. Among the principal statutory exceptions are: (i) certain residential mortgage loans; (ii) educational loans; and (iii) loans subject to the regulatory dollar amount limit. Under the agencies’ proposals, that dollar amount limit would increase from $100,000 to $400,000 while continuing to be subject to the applicable percentage-of-capital limitation.

The proposals preserve, however, longstanding exceptions for certain extensions of credit fully secured by U.S. government obligations, unconditional guarantees or take-out commitments of the United States, or a perfected security interest in a segregated deposit account maintained at the lending institution.

Why the Agencies Are Acting Now

The agencies observe that the principal dollar thresholds have remained largely unchanged since 1979 despite dramatic increases in inflation, economic growth, bank capital, and loan sizes. According to the agencies, the existing thresholds no longer reflect current economic realities and require board approval for many relatively routine insider loans that do not present the level of risk Congress originally contemplated. The agencies also note that community banks may be disproportionately affected because insiders in smaller communities often have fewer alternative sources of credit.

Principal Changes

The proposals would substantially increase the maximum dollar thresholds.

For extensions of credit to executive officers that are not otherwise specifically authorized by section 22(g) of the Federal Reserve Act, such as most consumer-purpose loans, including automobile loans and unsecured personal loans, the maximum amount would increase from $100,000 to $400,000.

Similarly, the maximum aggregate amount of credit that may be extended to an insider before prior approval of the bank’s board of directors becomes necessary would increase from $500,000 to $2 million.

Rather than allowing the thresholds to become outdated again, the agencies propose to adjust them automatically every five years using changes in nominal U.S. gross domestic product.

If adopted, prior board approval generally would be required whenever aggregate extensions of credit to an insider exceed the lower of 5 percent of the institution’s unimpaired capital and unimpaired surplus or $2 million.

Similarly, loans to executive officers for purposes not otherwise authorized by statute generally would be limited to the lower of 2.5% of unimpaired capital and unimpaired surplus or $400,000.

Expected Impact

The agencies characterize the proposals as burden-reduction measures rather than substantive changes in insider lending policy.

According to the FDIC, increasing the thresholds should reduce unnecessary board approvals, lessen administrative burdens, and improve the ability of community institutions to recruit and retain qualified directors and executive officers, particularly in rural markets where alternative sources of credit may be limited.

The FDIC also concludes that the proposals should not materially increase safety-and-soundness risks because insider loans generally represent only a small percentage of a bank’s total loan portfolio and remain subject to the substantive restrictions contained in the Federal Reserve Act, supervisory oversight, and banks’ internal controls.

Takeaways

We believe these coordinated proposals represent a sensible modernization of regulations that have remained largely unchanged for more than four decades. Rather than relaxing the statutory restrictions enacted by Congress, the Federal Reserve Board and the FDIC are exercising the authority Congress expressly delegated to them to update the regulatory thresholds implementing those statutory provisions.

If adopted substantially as proposed, the amendments would provide meaningful regulatory relief by reducing unnecessary board approvals, simplifying compliance, updating long-outdated dollar thresholds to reflect current economic conditions, and establishing an automatic mechanism to keep those thresholds current in the future—avoiding inadvertent violations that do not impact on an institutions safety and soundness.

Scott A. Coleman, John L. Culhane, Jr., Beau Hurtig and Alan S. Kaplinsky

OCC Weighs in on Oregon DIDMCA Opt-Out Litigation with Amicus Brief Supporting a Narrow Reading of Section 525

The Office of the Comptroller of the Currency (“OCC”) filed an amicus curiae brief on July 28, 2026, in National Association of Industrial Bankers, et al. v. Sean O’Day, pending in the U.S. District Court for the District of Oregon. While the OCC takes no position on preliminary injunctive relief, it strongly defends the federal interest-rate exportation framework under the National Bank Act and the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”), and rejects Oregon’s interpretation of Section 525’s opt-out provision.

The case challenges Oregon House Bill 4116, which applies Oregon’s 36% usury cap to consumer loans of $50,000 or less made to Oregon residents, including loans originated by out-of-state state-chartered banks. Plaintiffs argue the law is preempted because DIDMCA permits opt-outs only for loans “made in such State,” which they contend refers only to loans made by banks located in the opting-out state.

OCC: DIDMCA Established Parity Through Bank-Location-Based Lending Rules

The OCC frames DIDMCA as a parity statute designed to eliminate the competitive disadvantage state-chartered banks faced relative to national banks under Marquette National Bank v. First of Omaha Service Corp., which confirmed that national banks may export interest rates based on the location of the bank.

Section 521 of DIDMCA extended similar exportation authority to FDIC-insured state banks, authorizing them (like national banks under 12 U.S.C. § 385) to charge interest based on the law of the state where the bank is located or 1% above the federal reserve interest rate, whichever is greater. The OCC emphasizes that Congress’s goal was competitive equality between national and state banks, not borrower-based regulation.

Core Dispute: Scope of Section 525 Opt-Out Authority

The litigation turns on Section 525, which allows a state to opt out of Section 521 for loans “made in such State.”

Oregon interprets “made” to include all consumer loans of $50,000 or less to in-state residents, regardless of where the bank is located. The OCC rejects this approach, arguing that the phrase must be read consistently with Section 521’s bank-location rule. Under that framework, a loan is “made” only where the lending bank is located and performs its lending functions.

In the OCC’s view, Section 525 therefore permits a state to opt out only for loans made by state banks located within that state—not for loans originated by out-of-state state banks to in-state borrowers.

Statutory Structure and Longstanding Interpretation Support OCC Position

The OCC relies heavily on the parallel structure between DIDMCA Section 521 and National Bank Act Section 85, noting that Congress used materially identical language. Because Section 85 has long been interpreted to tie permissible interest rates to the location of the bank—not the borrower—the OCC argues the same interpretation must apply to DIDMCA.

The brief also cites consistent federal regulatory practice:

Marquette established bank-location-based rate exportation for national banks;
OCC interpretive guidance has consistently focused on where lending decisions are made; and
The FDIC has applied the same bank-location framework to state-chartered banks under DIDMCA.

Under this longstanding approach, borrower location has never determined applicable usury law.

Oregon’s Approach Would Disrupt Interstate Lending

The OCC warns that Oregon’s interpretation would allow any opt-out state to regulate loans originated in all other states simply because borrowers reside within Oregon. This, the OCC argues, would:

Undermine the parity between national and state banks that DIDMCA was designed to achieve;
Replace a uniform lending framework with a patchwork of conflicting state usury regimes;
Create significant legal uncertainty for interstate lending; and
Risk destabilizing the dual banking system by encouraging more state opt-outs.

The OCC stresses that Section 525 was intended as a narrow exception, not a mechanism for broad extraterritorial regulation.

Support From Prior Litigation and Regulatory Consistency

The OCC also points to the federal district court decision in the Colorado opt-out litigation, National Association of Industrial Bankers v. Weiser, which held that a loan is “made” where the lender performs its lending functions. The OCC cites it as persuasive authority consistent with the statutory structure.

The brief also urges the court not to disturb the settled meaning of “where the bank is located” in Section 521, warning that doing so could unsettle decades of consistent interpretation under both DIDMCA and the National Bank Act.

Significance of the OCC’s Position

The OCC’s participation underscores the federal government’s interest in maintaining a uniform, bank-location-based interest-rate exportation regime. As the primary regulator of national banks and a member of the FDIC Board, the OCC emphasizes that DIDMCA was enacted to eliminate competitive disparities between national and state banks, not to expand state authority over out-of-state state bank lending.

The brief also reflects longstanding OCC and FDIC alignment on the interpretation of DIDMCA and reinforces the OCC’s view that Oregon’s reading of Section 525 is inconsistent with congressional intent and the structure of federal banking law.

We will continue to monitor developments in this case, which will have significant implications for interstate lending, state usury laws, and the scope of DIDMCA opt-out authority.

Ballard Spahr represents the plaintiff trade associations in the Oregon case and the amici consortium of other trade associations in the Colorado case.

Alan S. Kaplinsky and Burt M. Rublin

15 States File Amicus Brief Supporting Challenge to Oregon’s DIDMCA Opt-out Law

Yesterday, the State of Utah, joined by the attorneys general of Alabama, Arkansas, Florida, Georgia, Iowa, Louisiana, Mississippi, Montana, Nebraska, Oklahoma, South Carolina, South Dakota, Texas, and West Virginia, filed an amicus brief in support of the plaintiffs’ motion for a preliminary injunction in the pending challenge to Oregon House Bill 4116. The lawsuit, brought by the National Association of Industrial Bankers, the Online Lenders Alliance, and the American Financial Services Association, contends that HB 4116 is preempted by Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”).

This litigation concerns the scope of DIDMCA’s opt-out provision in Section 525. The same issue is pending before the en banc Court of Appeals for the Tenth Circuit in a challenge to a Colorado statute opting out of Section 521 of DIDMCA pursuant to Section 525. The states’ amicus brief focuses on the consequences that Oregon’s law would have for state-chartered banks, state banking regulators, and the dual banking system itself.

States Emphasize the Importance of the Dual Banking System

The amici frame the dispute as implicating the core structure of the U.S. banking system: the coexistence of state- and federally chartered institutions.

They note that many states, including Utah, have adopted policies aimed at preserving competitive parity between state and national banks and maintaining the dual banking system. In their view, Congress pursued the same objective in DIDMCA, which was enacted in 1980 in the wake of the 1978 Supreme Court ruling in Marquette National Bank v. First of Omaha Service Corp., a decision confirming that national banks may export interest rates permitted by their home states.

DIDMCA responded by extending comparable interest-rate authority to state-chartered insured banks, thereby preventing them from being placed at a competitive disadvantage relative to national banks.

Against that backdrop, the amici argue that Oregon’s interpretation of DIDMCA would disrupt the balance Congress struck between state and federal banking regimes.

DIDMCA, Marquette, and the Opt-Out Framework

The states’ argument on statutory interpretation centers on a narrow reading of DIDMCA’s opt-out provision.

They contend that Section 525 permits a state to opt out only with respect to state banks chartered and located within that state, not state banks chartered in other jurisdictions. In their view, Oregon’s HB 4116 exceeds that authority by attempting to regulate interest rates on loans made by out-of-state, state-chartered banks.

The brief ties this conclusion to the statutory and historical context of DIDMCA. It emphasizes that Marquette established the baseline rule that a loan is made at the location of the lending institution, not the borrower. Congress legislated against that backdrop when it enacted DIDMCA, and the amici argue it did not intend the opt-out provision to allow one state to regulate the lending activities of state banks chartered and supervised by another state.

On this reading, the phrase “loans made in such State” refers only to loans made by banks located in the opt-out state, not loans merely involving in-state borrowers or payment activity.

Interference With State Banking Supervision

The brief also argues that Oregon’s law would complicate state regulators’ oversight of their own chartered institutions.

State banking agencies, the amici explain, supervise banks on a consolidated basis, including loan portfolios, capital adequacy, and loss reserves. A regime in which each state could impose its own interest-rate restrictions on out-of-state state banks would create a fragmented compliance environment that would spill over into supervisory practice.

According to the states, this patchwork would make it more difficult for regulators to assess safety and soundness and could ultimately affect depositors, shareholders, and customers of state-chartered institutions.

Sovereignty and Dormant Commerce Clause Concerns

The amici also raise constitutional concerns beyond preemption.

They argue that HB 4116 improperly regulates transactions occurring outside Oregon between non-Oregon banks and their customers. The statute’s reach, they contend, is especially broad because it would apply whenever a borrower maintains an Oregon residence and uses an Oregon-based account to pay off the loan, even if the loan was made by an out-of-state state bank and the borrower was not physically present in Oregon at origination.

In the states’ view, this extraterritorial regulation intrudes on the sovereign authority of other states to regulate their own chartered institutions and raises serious Dormant Commerce Clause concerns.

Competitive Disadvantage for State-Chartered Banks

The brief further argues that HB 4116 recreates the very competitive imbalance Congress sought to eliminate in DIDMCA.

Because national banks retain interest-rate exportation authority under Marquette and the National Bank Act, Oregon’s restrictions would solely affect state-chartered banks. The amici contend that this disparity would incentivize institutions to convert to national charters to avoid Oregon’s regulatory regime.

Such a shift, they argue, would erode the dual banking system by reducing the role of state supervision.

Practical Problems Created by HB 4116

Finally, the states highlight operational difficulties associated with enforcing Oregon’s law.

Lenders, they argue, often cannot reliably determine a borrower’s domicile or whether a payment originates from an Oregon financial institution. As a result, institutions would need to continuously monitor borrower location, account activity, and payment sources to assess potential applicability of Oregon law.

The amici characterize this as an impractical compliance burden that is inconsistent with established interstate banking practices.

Our Take

The filing significantly broadens the coalition supporting the plaintiffs’ preliminary injunction motion. The attorneys general focus on state sovereignty, supervisory authority, and the structural integrity of the dual banking system.

The preliminary injunction hearing is likely to draw significant attention, as the court’s interpretation of DIDMCA’s opt-out provision could have implications far beyond Oregon. Several states have considered similar legislation aimed at limiting interest-rate exportation by out-of-state state-chartered banks, and the court’s ruling may shape the trajectory of such efforts nationwide.

We will continue to monitor the case and report on further developments.

Ballard Spahr represents the plaintiff trade associations in the Oregon case and the amici consortium of other trade associations in the Colorado case.

Alan S. Kaplinsky and Burt M. Rublin

Comptroller Gould Highlights Digital Financial Literacy, Responsible Innovation, and the Role of Community Banks

At the July 27, 2026 meeting of the Financial Literacy and Education Commission (FLEC), Comptroller of the Currency Jonathan Gould outlined the Office of the Comptroller of the Currency’s approach to financial literacy, emphasizing digital financial education, responsible innovation, and the important role that banks, particularly community banks, play in helping consumers navigate an increasingly complex financial system.

Like the remarks delivered at the same meeting by CFPB Deputy Director Mark Paoletta, Comptroller Gould’s comments reflect the Trump administration’s broader effort to link financial literacy with increased consumer participation in the financial system and capital markets. The Comptroller also highlighted the OCC’s view that promoting responsible innovation and expanding access to financial services are complementary objectives rather than competing priorities.

Digital Financial Literacy as a Policy Priority

Comptroller Gould observed that consumers today have access to financial services that “would have been unimaginable only a few years ago,” noting that Americans can now open bank accounts on their smartphones and access financial services around the clock. At the same time, he cautioned that criminals are exploiting many of these same technologies to perpetrate increasingly sophisticated scams.

Accordingly, Gould characterized helping consumers understand both the opportunities and the risks associated with digital financial services as “one of the defining financial literacy tasks of the 21st century.” He stated that the Trump administration is committed to leading those efforts.

The emphasis on digital financial literacy is consistent with the administration’s broader focus on encouraging innovation in financial services while ensuring that consumers are equipped to use new products and technologies safely and effectively.

OCC Educational Resources

Gould highlighted several existing OCC resources designed to assist consumers and financial institutions. Among them is HelpWithMyBank.gov, which provides information and assistance to consumers who have questions or concerns regarding their national banks and federal savings associations.

He also noted that the OCC maintains a Financial Literacy Resource Directory and continues to distribute educational materials to financial institutions ranging from the nation’s largest banks to community banks.

These resources illustrate the OCC’s longstanding view that consumer education is an important complement to prudential supervision and consumer protection.

Community Banks as Trusted Financial Educators

A significant portion of the Comptroller’s remarks focused on the role of community banks in advancing financial literacy.

According to Gould, community banks are uniquely positioned to educate consumers because of their close relationships with local families and small businesses. He cited a May roundtable involving the OCC, the Federal Reserve, the FDIC, the NCUA, community banks, regional banks, and other industry participants, during which regulators heard examples of institutions partnering with schools, nonprofit organizations, and community groups to provide financial education.

The remarks reinforce the OCC’s view that financial literacy initiatives are often most effective when they are delivered through trusted local institutions rather than solely through government programs.

Financial Literacy as a Driver of Economic Participation

Perhaps the most notable aspect of Gould’s remarks was his discussion of financial literacy as a means of encouraging broader participation in the American economic system.

Quoting Treasury Secretary Scott Bessent’s observation that “For Americans to believe in capitalism, they need the opportunity to participate in it,” Gould argued that improving financial literacy enables consumers to save, borrow responsibly, invest, protect themselves against fraud, and build wealth.

He further stated that expanding financial literacy promotes “a broader culture of ownership and economic opportunity” that strengthens both the financial system and the principles of free enterprise.

The written version of Gould’s remarks went even further, including language not highlighted in the OCC’s accompanying press release. Specifically, he suggested that “Trump Accounts can be the antidote, minting a generation of capitalists who believe in America, build wealth, invest in their communities, and own a share in our nation’s economic success.” Although that language was omitted from the OCC’s news release excerpts, it reflects the administration’s broader policy objective of encouraging ownership, investing, and wealth accumulation through financial education and expanded access to financial markets.

Looking Ahead

Looking ahead, Gould emphasized that younger Americans are entering an increasingly digital financial system and should understand the role that investment, entrepreneurship, and responsible risk-taking have played in making the U.S. economy one of the world’s strongest.

He concluded by stressing that banks have an important role in providing financial literacy resources to their customers and in promoting economic growth and confidence in the nation’s capital markets.

Our Observations

Comptroller Gould’s remarks provide another indication that the federal banking agencies under the Trump administration are placing greater emphasis on financial literacy as an affirmative policy objective. Unlike prior approaches that often focused primarily on consumer protection through regulation and enforcement, the administration appears to view financial education as an important mechanism for expanding participation in the banking system, encouraging responsible use of innovative financial products, and increasing investment and wealth creation. The remarks also underscore the administration’s continuing support for responsible financial innovation, while recognizing that digital financial services create new risks that require consumers to be better informed and better equipped to avoid fraud and scams.

Alan S. Kaplinsky and John L. Culhane, Jr.

Adding to the Tally: Another Court Denies Bid for Class Certification in Cookie Tracking Case

On July 20, 2026, another California federal court denied class certification in a putative privacy class action involving a company’s cookie-based advertising platform. Lewis v. Magnite, Inc., 2:25-cv-03448-MWC-SSC (C.D. Cal. July 20, 2026). The plaintiffs alleged that Magnite secretly installed tracking cookies—called “khaos IDs”—on users’ browsers to collect data for targeted advertising. The claims included violations of the federal Wiretap Act (ECPA) and California Invasion of Privacy Act (CIPA), among other privacy-based claims.

Why the Court Said “No” to Class Certification

The court found multiple fatal flaws in the plaintiffs’ certification bid:

Individualized consent issues. Because putative class members visited different websites with different privacy policies and cookie disclosures, each person’s consent (or lack thereof) required individual analysis. The court noted that determining what each user saw, agreed to, and understood would overwhelm any common questions.
Inability to know who’s in the class. The defendant operated pseudonymously—it didn’t know who was behind any given tracking ID. Users could have multiple IDs (different browsers, different devices), or multiple people could share the same ID. Without a workable method to identify class members, the class fell apart.
Standing problems. The court emphasized that a bare statutory violation isn’t enough to confer standing under Article III. Plaintiffs couldn’t show how privacy harms could be evaluated class-wide, especially when the defendant’s records showed it collected pseudonymous data as opposed to names, addresses, or emails.
No damages roadmap. Plaintiffs failed to show how damages could be calculated on a class-wide basis, which the court held was a prerequisite under Comcast Corp. v. Behrend.

What This Means for Your Business

This decision underscores that class certification in tracking and cookie cases is far from automatic. Courts are scrutinizing whether plaintiffs can demonstrate class-wide harm, identify class members, and overcome individualized consent defenses. For companies that rely on advertising technology, the case offers both reassurance and a roadmap:

Robust privacy disclosures matter. Varied, site-specific privacy policies and cookie banners can create individualized consent questions that defeat predominance.
Pseudonymous data is a defense. If your tracking technology collects pseudonymous identifiers rather than personally identifiable information, plaintiffs may struggle to show concrete harm or even identify who belongs in a class.
Leverage these arguments early. As we previously highlighted, when facing a demand letter or class action complaint, decisions like Lewis v. Magnite should shape your defense strategy from day one—potentially avoiding costly discovery or settlement pressure.

J. Matt Thornton, Lexi Chapman and Elizabeth A. James

California DFPI Appeals Trial Court Decision Rejecting Its ‘True Lender’ Theory in OppFi Case

The California Department of Financial Protection and Innovation (DFPI) has taken the next step in its challenge to a bank-fintech lending program by appealing the Los Angeles County Superior Court’s decision in Opportunity Financial, LLC v. Hewlett. According to the Superior Court docket, a Notice of Appeal was filed on July 21, 2026, ensuring that the closely watched dispute over the ‘true lender’ doctrine will now move to the California Second Appellate District Court of Appeal.

As our readers may recall, we previously discussed the Superior Court’s final Statement of Decision, issued on May 19, 2026 in which the court rejected the DFPI’s contention that Opportunity Financial, LLC (OppFi), rather than FinWise Bank, should be treated as the true lender for purposes of California’s Fair Access to Credit Act. The court concluded that FinWise Bank originated the loans, funded them with its own capital, controlled the underwriting criteria, retained an ownership interest in the loans, and exercised meaningful oversight over the lending program. Based on those facts, the court held that the loans were lawfully made by an FDIC-insured state bank and therefore FinWise Bank could rely on Section 27 of the Federal Deposit Insurance Act to export Utah interest rates into California.

The trial court also relied heavily on the longstanding principle that a loan’s legality is determined at its inception. Because the loans were valid when originated by FinWise Bank, the court rejected the DFPI’s argument that OppFi’s acquisition of a substantial participation interest shortly after origination transformed OppFi into the true lender.

The appeal ensures that the litigation over one of the country’s most important bank-fintech partnership cases is far from over.

Issues Likely to Be Addressed

The appeal is expected to present several significant legal questions, including:

Whether California law recognizes a common-law “true lender” doctrine in the absence of legislation adopting either a predominant economic interest test or a totality of the circumstances test;
Whether the trial court correctly concluded that FinWise Bank, rather than OppFi, was the lender when the loans were originated;
Whether OppFi’s purchase of a 95% participation interest shortly after origination is of any significance;
Whether the longstanding “valid when made” principle was properly applied; and
Whether California’s interest rate limitations are of any relevance when Section 27 of the Federal Deposit Insurance Act authorizes state-chartered FDIC-insured banks to export the interest rates permitted by their home states.

Why This Appeal Matters

The appeal is likely to become one of the most closely watched cases involving bank-fintech partnerships. State regulators and private plaintiffs increasingly have relied on “true lender” theories to challenge lending programs that utilize banks’ federal authority to export interest rates. Conversely, banks, fintech companies, and many industry participants contend that such partnerships are fully consistent with federal banking law and play an important role in expanding access to credit.

Although the Superior Court’s decision represented a significant victory for OppFi and the bank-partnership model, it was a trial court decision without statewide precedential effect. An opinion from the California Court of Appeal, particularly if published, would carry substantially greater significance and could influence courts confronting similar issues in California and elsewhere.

We will continue to monitor this appeal closely and report on significant developments, including the Court of Appeal’s assignment of the case, the parties’ appellate briefs, any amicus filings, oral argument, and the court’s eventual decision.

John L. Culhane, Jr., Alan S. Kaplinsky, Adam Maarec, Joseph J. Schuster and Ronald K. Vaske

LOOKING AHEAD

RESPRO 2026 Fall Seminar

September 16 – 17, 2026 | Mayer Brown's Washington, D.C. offices

Washington Update: What to Expect for Midterm Elections and Update on Housing Policy
September 16, 2026 – 4:30 PM ET
Speaker: Timothy Jenkins

CFPB Update
September 17, 2026 – 1:00 PM ET
Speaker: Richard J. Andreano, Jr.

MBA Compliance and Risk Management Conference

September 27 – 29, 2026 | Grand Hyatt, Washington, D.C.

COMPLIANCE CONVERSATIONS TRACK: RESPA Section 8
September 27, 2026 – 1:00 PM ET
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 - August 6, 2026

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