Sponsors (4)
The bill shifts control over certain loan terms back to states and clarifies the opt-out process—potentially strengthening protections for borrowers in some states—while creating multi‑state compliance costs, uneven consumer protections across states, and transitional legal uncertainty.
State governments and state-chartered banks and credit unions can opt out of federal preemption so that state law governs certain in‑state loan terms, and the bill repeals and replaces the older statute to clarify the opt-out mechanism and reduce legal uncertainty for states and in‑state lenders.
Borrowers (including homeowners and small-business owners) in states that choose to opt out may obtain stronger consumer protections under state law rather than being limited by federal preemption.
Banks and credit unions that operate across multiple states could face regulatory fragmentation and higher compliance costs because different states may impose different rules for in‑state lenders.
Consumers in states that do not opt out may remain subject to weaker protections if federal preemption continues to block stronger state consumer‑finance rules.
Repealing and replacing the existing statute and changing which law applies could create litigation risk and transitional uncertainty about governance of past or existing loans, affecting lenders and borrowers.
Based on analysis of 2 sections of legislative text.
Gives States a statutory opt-out so two specified federal lending subsections won’t apply to loans by state‑chartered institutions if the State adopts or certifies an explicit opt‑out law.
Introduced March 9, 2026 by Warren Davidson · Last progress March 9, 2026
Creates a state opt-out that lets a State stop two federal rules from applying to loans made by state‑chartered banks and credit unions if the State enacts a law or certifies a voter-approved measure saying it does not want the federal rule to apply. It also repeals a prior federal provision (12 U.S.C. § 1730g) and makes the new opt-out rules apply retroactively to any state laws or certifications that were made under the repealed provision. The result is narrower federal preemption for certain lending rules for in‑State chartered institutions: where a State elects the opt-out, affected federal subsections will not apply to loans or loan commitments made by state‑chartered institutions from the date the State law or certification takes effect (and retroactively for prior laws/certifications covered by the repealed section).