Sponsors
The bill shifts more control over in‑state interest rules to states and preserves prior state opt-outs—providing local clarity for some borrowers and lenders—at the expense of possible higher rates or fewer protections in opt‑out states and added complexity and short‑term legal uncertainty for multi‑state lending.
State-chartered banks and credit unions can use their state's allowable interest rules for in‑state loans, increasing local control over lending terms.
Existing state opt-outs under the prior statute are preserved so prior certifications remain governed by the new provisions, avoiding retroactive disruption for lenders and borrowers.
Borrowers in states that opt out will see clearer, locally governed interest-rate rules for certain loans, reducing legal uncertainty for homeowners, renters, and small business owners in those states.
Borrowers in states that opt out could face higher interest rates or reduced consumer protections if state rules allow rates above prior federal standards.
Removing the uniform federal preemption increases complexity and compliance costs for multi‑state lenders, which may be passed on to consumers as higher fees or reduced access to credit.
Repealing and replacing the prior federal provision could spark transitional legal disputes over which standard applies, creating short‑term uncertainty for state governments, lenders, and borrowers.
Based on analysis of 2 sections of legislative text.
Allows States to opt out of federal interest‑rate preemption for loans made by institutions chartered in that State, and repeals an older federal provision while preserving prior state actions.
Permits states to stop federal interest-rate preemption from protecting loans made by institutions chartered in that state. The bill amends federal banking law so a state that passes a law or certifies a voter-approved provision can require that its own state-chartered banks and insured credit unions follow state interest-rate limits for loans and commitments made after that state action, and it repeals an older federal provision while preserving the legal effect of prior state actions taken under that provision.
Introduced February 12, 2026 by Bernardo Moreno · Last progress February 12, 2026