Bank Trade Associations Seek Preliminary Injunction Against Oregon’s DIDMCA Opt-Out Law

The National Association of Industrial Bankers (NAIB), the Online Lenders Alliance (OLA), and the American Financial Services Association (AFSA) have moved for a preliminary injunction to block enforcement of a recently enacted Oregon law that seeks to impose Oregon’s 36% interest-rate cap on consumer finance loans made by out-of-state state-chartered banks in their home states to Oregon residents.

The motion, filed on July 9, 2026 in the U.S. District Court for the District of Oregon, accompanies an earlier-filed complaint alleging that Oregon House Bill 4116 is preempted by federal banking law and, in part, violates the dormant Commerce Clause of the U.S. Constitution.

The Challenged Oregon Law

As we previously reported, Oregon recently exercised its right under Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) to opt out of DIDMCA’s interest-rate exportation provisions applicable to state-chartered banks.

The plaintiffs do not challenge Oregon’s decision to opt out with respect to Oregon-chartered banks. Rather, they challenge a separate provision of House Bill 4116 that purports to apply Oregon’s Consumer Finance Act (and its 36% interest-rate ceiling) to consumer finance loans of $50,000 or less made by state-chartered banks in their home states to Oregon residents.

According to the plaintiffs, Oregon’s law unlawfully attempts to regulate loans made outside Oregon by banks chartered and regulated in other states in violation of the express preemption provision in Section 521 of DIDMCA.

Why the Plaintiffs Say They Are Likely to Succeed

The motion argues that the plaintiffs are likely to prevail on the merits because Oregon’s law conflicts with Section 521 of DIDMCA, which authorizes state-chartered banks to charge interest at rates permitted by the laws of the state where the bank is located and to export the home state rates in their interstate loans.

The plaintiffs contend that Section 521 of DIDMCA expressly preempts conflicting state interest-rate limitations in the borrowers’ state and that in Section 525 of DIDMCA Congress gave states only a limited authority to opt out of DIDMCA’s preemption provisions “with respect to loans made in such State.”

Central to the dispute is the meaning of the phrase “loans made in such State.”

The plaintiffs rely heavily on the Federal District Court of Colorado’s decision in National Association of Industrial Bankers v. Weiser, which held that a loan is “made” in the state where the bank is located and performs its lending functions, not where the borrower resides. Under that interpretation, Oregon may regulate loans made by Oregon-chartered banks in Oregon, but it may not regulate loans made by out-of-state state banks in their home states to Oregon residents.

The motion also points to positions previously advanced by both the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency in the ongoing Weiser litigation. According to the plaintiffs, federal banking regulators have taken the view that a DIDMCA opt-out does not authorize a state to apply its interest-rate limits to loans made in other states by state banks chartered elsewhere.

Dormant Commerce Clause Challenge

The motion separately argues that one portion of House Bill 4116 violates the dormant Commerce Clause.

Under the challenged provision, Oregon law would apply when an Oregon resident makes payments on a consumer finance loan from an Oregon bank account or through an Oregon financial institution, even if the loan itself was made while both the bank and borrower were located outside Oregon.

The plaintiffs contend that this provision regulates conduct occurring wholly outside Oregon’s borders and therefore constitutes an impermissible extraterritorial regulation of interstate commerce that is precluded by Supreme Court and Ninth Circuit precedent.

The Claimed Irreparable Harm

The motion places particular emphasis on irreparable harm, a critical requirement for obtaining preliminary injunctive relief.

According to the plaintiffs, their member state banks already have incurred substantial compliance costs as a result of House Bill 4116 which became effective on June 5, 2026. They further assert that enforcement of the statute would force many institutions to reduce lending activity, alter product offerings, terminate relationships with customers and business partners, and forego future business opportunities.

The motion argues that these injuries are irreparable because sovereign immunity generally prevents recovery of monetary damages against the State of Oregon. The plaintiffs also contend that the loss of customers, goodwill, and competitive position cannot be adequately remedied after the fact. In addition, the plaintiffs rely on caselaw holding that irreparable harm is presumed where a plaintiff has shown that it is likely to prevail on its challenge to the constitutionality of a statute.

In support, the motion cites the district court’s decision in NAIB v. Weiser, where the court granted a preliminary injunction against Colorado’s DIDMCA opt-out law after finding that state-chartered banks would suffer irreparable harm from lost customers, lost goodwill, lost revenue, and compliance burdens.

The Competitive Impact on State Banks

A recurring theme in both the complaint and the preliminary injunction motion is the competitive imbalance created by Oregon’s law.

The plaintiffs emphasize that national banks derive their interest-rate exportation authority from Section 85 of the National Bank Act rather than DIDMCA. As a result, Oregon’s statute does not affect national banks’ ability to export rates authorized by their home states.

According to the plaintiffs, Oregon’s law therefore disadvantages state-chartered banks while leaving national banks free to continue offering the same products and pricing structures in Oregon, with less competition from state banks.

The motion argues that this outcome directly conflicts with Congress’s purpose in enacting Section 521 of DIDMCA, which was designed to eliminate competitive disparities between national banks and state-chartered banks. That objective is expressly set forth in the preamble of Section 521.

Why the Motion Matters

The preliminary injunction motion represents the latest development in a growing national dispute over the scope of DIDMCA’s opt-out provision. Oregon is only the fourth jurisdiction currently maintaining a DIDMCA opt-out, joining Colorado, Iowa, and Puerto Rico.

The case also arrives while the Tenth Circuit, sitting en banc, is considering the same core statutory question in NAIB v. Weiser: whether a loan is “made” only where the bank is located, or also where the borrower resides.

An order by the Court granting or denying the injunction will be immediately appealable to the Ninth Circuit.

Either way, the Oregon litigation and Tenth Circuit’s forthcoming en banc decision in NAIB v. Weiser will have a significant impact on interstate lending, bank-fintech partnerships, and the continuing debate over the scope of state authority to regulate loans made by out-of-state state-chartered banks.

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