Oregon Bans Out-of-State Banks From Exceeding 36% Interest Rate
Summary
Oregon Governor Tina Kotek signed Oregon HB 4116 on April 7, 2026, opting Oregon out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) preemption provisions. The law prohibits out-of-state FDIC-insured, state-chartered banks from making consumer finance loans of $50,000 or less to Oregon borrowers using interest rates exceeding Oregon's 36% usury cap. The law takes effect June 5, 2026. Oregon is the fourth jurisdiction to opt out of DIDMCA, following Puerto Rico, Iowa, and Colorado. The law does not apply to national banks, which may still preempt state usury restrictions.
Out-of-state marketplace lenders originating consumer loans to Oregon borrowers should verify their current interest-rate arrangements before the June 5, 2026 effective date, as loans exceeding 36% may now be unenforceable against Oregon residents. State-chartered bank partners should review partnership structures used for rate exportation. National bank arrangements appear unaffected under the current text.
What changed
Oregon enacted HB 4116 effective June 5, 2026, opting out of DIDMCA rate-exportation preemption for state-chartered, FDIC-insured banks. The law caps interest rates on consumer finance loans of $50,000 or less to Oregon residents at 36%, regardless of the lender's home-state permitted rate. The scope extends to any person originating, brokering, or facilitating such loans to Oregon borrowers via mail, telephone, or internet. Affected parties include out-of-state banks engaged in marketplace lending arrangements with Oregon consumers. National banks are explicitly carved out. Compliance counsel should note that Colorado's similar opt-out faces a constitutional challenge in the Tenth Circuit, which could affect the enforceability of Oregon's law.
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Apr 22, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
April 21, 2026
Oregon Opts-Out of Federal Preemption for Certain Consumer Loan Products
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What Happened?
On April 7, 2026, Oregon Governor Tina Kotek signed into law Oregon HB 4116 which prohibits out-of-state FDIC insured, state-chartered banks from making consumer finance loans of $50,000 or less to Oregon borrowers using the banks’ home-state interest rates if those rates exceed Oregon’s 36% interest rate cap. According to the Oregon Legislative website, the law takes effect on June 5, 2026.
Why It Matters
In recent years, certain states (i.e., Illinois, New Mexico, Washington State, Maine, among others ) have adopted anti-evasion restrictions for marketplace lending arrangements and with notable exceptions, do not recognize the bank’s rate exportation authority if the interest rates of the loans originated in these partnerships exceed certain proscribed state usury caps. The new Oregon law follows this trend by opting Oregon out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), and expressly providing that state chartered banks must adhere to usury restrictions (36%) of “consumer finance loans”, namely secured and unsecured consumer loans in amounts of $50,000 or less. Congress enacted DIDMCA during a time of very high interest rates, and the statute aimed to improve competition between state and national banks by allowing interest rate “exportation” across state lines, though it permitted states to “opt out” of these preemption provisions.
The new law does not apply to national banks, however, who apparently are still able to preempt restrictions applicable to “consumer finance loans.” With an eye toward marketplace lending arrangements, the law applies to anyone originating, brokering and facilitating consumer loans to Oregon residents, whether by mail, telephone or the Internet.
What to Do Now
With the enactment of Oregon HR 4116, Oregon becomes the fourth jurisdiction to opt out of DIDMCA, following Puerto Rico, Iowa and Colorado. Notably, however, Colorado’s recent opt out of DIDMCA has been subject to a constitutional challenge in the Tenth Circuit Court of Appeals, which if ultimately successful, could jeopardize the enforceability of Oregon HR 4116. Further, there is pending federal legislation, the fate of which is uncertain, that would prohibit additional DIDMC opt-outs. Nevertheless, legislation has been introduced in other states that would either opt the state out of DIDMCA or would enact anti-evasion provisions that would disallow the exportation of interest rates exceeding the particular state limitations in a marketplace lending arrangement.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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