On December 16, the OCC, the FDIC, and 20 state attorneys general filed a trio of briefs in support of the plaintiffs’ petition for rehearing en banc in the U.S. Court of Appeals for the 10th Circuit.

OCC’s Amicus Brief

The OCC’s brief argued this holding, if left in place, would fundamentally alter the application of the federal interest-rate framework, which Congress established for national banks through the National Bank Act of 1864 and expanded with DIDMCA to ensure parity between national and state banks. The OCC noted that under Section 85 of the National Bank Act, national banks may charge interest at the rate allowed by the laws of the state where the bank is located — and export that rate to borrowers in other states. Since 1980, DIDMCA has authorized state banks to do the same, though it allows states to opt out of this framework for loans “made” in the state. Colorado’s recent legislation opting out of DIDMCA purported to apply to loans provided by banks licensed by Colorado, and to loans provided by out-of-state state banks to Colorado residents.

The OCC averred the panel’s acceptance of Colorado’s broad interpretation of the effect its opt-out would, if allowed to stand, undermine state banks’ ability to charge a uniform rate, disrupts the dual banking system, and threatens to reduce credit availability.

FDIC’s Amicus Brief

The FDIC argued that the panel’s decision, which held that a loan is “made” in an opt-out state if either the lender or the borrower is located in that state, was inconsistent with the current statutory framework. The agency emphasized that this interpretation expands the reach of a state’s opt-out to any state-chartered bank serving Colorado borrowers, regardless of where that bank is located, and imposes significant financial and operational consequences on state-chartered banks outside Colorado seeking to offer loans to Colorado consumers.

The FDIC maintained that nothing in the text or purpose of Section 525 suggests Congress intended to allow a state’s opt-out to extend to state banks chartered in other states. According to the FDIC, such an interpretation undermined the benefits Congress intended in Section 521, which aims to ensure parity between state-chartered and national banks and to avoid a patchwork of interest rate caps based solely on the borrower’s location. The FDIC warned that if the panel decision stands, it could encourage more states to opt out, threatening the ability of state-chartered banks to lend across state lines, reducing consumer loan choices, and jeopardizing the integrity of the dual banking system.

States’ Amicus Brief

An amicus brief filed by the states of Utah, Alabama, Alaska, Arkansas, Florida, Georgia, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, West Virginia, and Wyoming argued the panel wrongly interpreted the phrase “loans made in such State” to include loans where the borrower, rather than the lender, is located in the state. This interpretation, the amici states argued, effectively allowed one state, Colorado, to impose its interest rate regulations on every other state-chartered bank nationwide that lends to a Colorado resident.

The amici states asserted that the panel’s decision undermined the competitive equality between state- and federally-chartered institutions and threatened the advantages of the dual banking system, contrary to the stated purpose of DIDMCA. As a result of the panel’s interpretation,  their ability “to regulate their own financial institutions under their own regulations and ensure their viability is impaired.”