Sponsors (5)
The bill gives states and state‑chartered lenders clearer authority to opt out of federal preemption—potentially strengthening protections for borrowers in opting states—while creating uneven protections across states and added compliance and litigation risks for lenders.
State-chartered banks and credit unions can opt out of federal preemption for in‑state lending, and the bill repeals and replaces the older statute to clarify and consolidate that opt-out mechanism, reducing legal uncertainty for states and in‑state lenders.
Borrowers in states that choose to opt out may receive stronger consumer protections under state law than they would under federal preemption.
Consumers in states that do not opt out could remain subject to weaker federal-preemption rules and therefore have fewer consumer-finance protections compared with borrowers in opt-out states.
Allowing state-by-state opt-outs creates regulatory fragmentation that raises compliance complexity and costs for banks and credit unions that operate across state lines, which could be passed on to customers.
Repealing the existing statute and changing the governing rules could produce transitional uncertainty or litigation over which law applies to past or existing loans.
Based on analysis of 2 sections of legislative text.
Allows States to opt out of two federal lending preemption provisions for loans by in‑state‑chartered institutions, repeals an older preemption statute, and makes opt‑outs retroactive to prior state actions.
Official title: To restore and clarify the intent of the Federal interest rate exportation parity for State-chartered banks by allowing States to opt out of preemption only with respect to loans made by their own chartered institutions, and for other purposes.
Introduced March 9, 2026 by Warren Davidson · Last progress March 9, 2026
Allows states to opt out of two federal statutory provisions that preempt state law for loans made by state‑chartered institutions, and repeals an older federal preemption provision. If a State passes a law or certifies a voter‑approved provision saying it does not want the federal subsections to apply, those federal subsections will not apply to loans or loan commitments made by in‑state‑chartered institutions from the date the state action is adopted; the bill also repeals a separate statutory preemption provision and makes the new opt‑out rules retroactive to past state actions under the repealed law.