Sponsors (8)
The bill shifts control over certain consumer‑finance rules to states—potentially improving protections for borrowers in opting states and reducing statutory ambiguity—while creating uneven protections across states, higher compliance costs for multistate lenders, and some transitional litigation risk.
State-chartered banks and credit unions in states that opt out will be governed by state consumer-finance laws (not the narrower federal preemption) for certain loan terms, giving states control over in‑state lending rules.
Borrowers in states that choose to opt out will likely gain stronger consumer protections under state law (e.g., limits on fees or unfavorable loan terms) compared with the federal baseline.
Repealing and replacing the older statute clarifies and consolidates the legal mechanism for state opt-outs, reducing legal uncertainty for states and state‑chartered lenders about how to implement opt-out choices.
Banks and credit unions that operate across state lines will face regulatory fragmentation and higher compliance costs because different states could adopt divergent rules once opt-outs occur.
Consumers in states that do not opt out may remain limited to the federal preemption standard and therefore could have weaker protections than residents of opt-out states, producing uneven consumer protections nationwide.
Repealing the existing statute and changing the legal regime may create litigation risk and transitional uncertainty about which law governed past or existing loans, imposing legal costs and confusion on lenders and borrowers.
Based on analysis of 2 sections of legislative text.
Allows states to opt out of two federal lending provisions for loans by in‑state‑chartered institutions, repeals a 1980 preemption provision, and makes opt-outs retroactive to prior state actions.
Creates a new state opt-out allowing states to exempt in‑state‑chartered depository institutions from two specified federal lending provisions (a federal preemption of state interest-rate rules and a signage/insurance-logo rule) when the state enacts a law or certifies a voter-approved measure declining federal application. It also repeals a 1980 federal provision (12 U.S.C. § 1730g) and makes the opt-out rules retroactive to prior state laws or certifications adopted under the repealed provision.
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