Federal Judge Enjoins Colorado Interest-Rate Statute
June 19 2024 - 6:11PM
Business Wire
In a major victory that will help preserve access to credit for
Colorado consumers who need it most, a federal judge has
preliminarily enjoined a Colorado statute that would have imposed
interest-rate and fee caps on loans made to Colorado residents by
state-chartered banks located outside Colorado.
Three leading financial services trade organizations—the
National Association of Industrial Bankers, the American Financial
Services Association, and the American Fintech Council—sued in
March, asserting the Colorado statute is plainly invalid because it
is inconsistent with federal law. Granting plaintiffs’ motion for a
preliminary injunction, U.S. District Judge Daniel D. Domenico
found that the trade groups “have made a strong showing that they
are substantially likely to succeed on the merits of their
preemption claim.”
The new law, HB23-1229, was scheduled to take effect on July 1,
2024. It was enacted as part of a campaign to curb “predatory”
lending by banks outside Colorado. But as explained in plaintiffs’
complaint and injunction motion, the cap on interest rates imposed
by the new law applies far more broadly than Congress intended—to
banks outside Colorado—and is therefore inconsistent with the
federal Depository Institutions Deregulation and Monetary Control
Act of 1980 (DIDMCA) and undermines the competitive position of
community banks. It also won’t advance the state’s goals since, as
the decision granting an injunction points out, Colorado’s law
would not have applied to national banks.
Plaintiffs’ members include responsible, ethical state-chartered
banks that offer a wide variety of useful, familiar, everyday
credit products to Colorado consumers, including personal
installment loans, “buy now, pay later” (BNPL) loans, vehicle
financing, and store-branded credit cards.
The three trade organizations are represented by a team of
lawyers from Davis Wright Tremaine LLP, Sullivan & Cromwell
LLP, and Holland & Knight LLP.
About American Financial Services Association
Founded in 1916, AFSA is the primary trade association for the
consumer credit industry, protecting access to credit and consumer
choice. AFSA provides the consumer credit industry and the
consumers it services with a voice in Washington, D.C., where the
association is headquartered, and access to the media and
investment community. It also provides policy advice and issues
management at both the federal and state level. Learn more at
https://afsaonline.org/.
About American Fintech Council
A standards-based organization, AFC is the premier trade
association representing the largest financial technology (Fintech)
companies and innovative BaaS banks. Our mission is to promote a
transparent, inclusive, and customer-centric financial system by
supporting responsible innovation in financial services and
encouraging sound public policy. AFC members foster competition in
consumer finance and pioneer products to better serve underserved
consumer segments and geographies. Learn more at
https://fintechcouncil.org/.
About National Association of Industrial Bankers
NAIB is a Utah-based trade association representing industrial
loan companies (ILCs). ILCs, or industrial banks, have been an
integral part of the U.S. financial system for over a century,
providing critical access to credit opportunities for those
traditionally underserved by large national financial institutions.
NAIB champions innovative financial services for Americans by
expanding access to credit, guaranteeing consumer choice, and
providing unique banking services. Learn more at
https://www.industrialbankers.org/.
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Mark Fefer, Head of PR, Davis Wright Tremaine LLP,
markfefer@dwt.com, 206.757.8583.