On March 5, 2026, the Oregon legislature passed House Bill 4116 (“HB 4116”), opting Oregon out of the federal preemption available under the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”) 12 U.S.C. § 1831d.

DIDMCA permits an out-of-state bank to make loans at interest rates allowable under the laws of the bank’s home state. For example, a bank in Utah can make loans in Oregon at rates allowed in Utah. Utah has no caps on rates, so a Utah bank can charge Oregon consumers whatever rates it chooses. Lenders partner with out-of-state banks to take advantage of this privilege.  Consumer advocates refer to these relationships as rent-a-bank lending. DIDMCA grants state banks the ability to export financial terms nationwide but also provides states with the right to “opt out” of federal preemption for loans made “in the state” that exercise the opt out option.

In 2007, the Oregon legislature protected Oregon consumers’ rights by eliminating licensing exemptions for financial institutions and capping interest rates at 36%. As financial technology has evolved, predatory online lenders found a way to exploit this law by using the DIDMCA loophole to bypass Oregon’s 36% interest rate cap.

Oregon is the fourth U.S. jurisdiction (others are Colorado, Iowa, Puerto Rico) to opt out under Section 525 of DIDMCA.  HB 4116 amends the Oregon Consumer Finance Act (“CFA”), and through these amendments, Oregon formally opts out of the federal interest-rate preemption for state-chartered banks. The amended Section 725.015 of the CFA expressly states that Oregon does not permit any of the amendments under DIDMCA to apply to consumer finance loans made in Oregon. Under the CFA, a “consumer finance loan” is defined broadly to include any loan or line of credit up to $50,000, whether unsecured or secured by personal or real property, with periodic payments and terms longer than 60 days.

HB 4116 further expands the CFA’s application to any lender, agent, broker, or facilitator making consumer finance loans of $50,000 or less to a consumer who resides in or maintains a domicile in Oregon and either:

• Is physically located in the state when negotiating, agreeing to terms, or executing a consumer finance loan of $50,000 or less via mail, telephone, or internet; or
• Makes a payment on such a loan by debiting an account at a financial institution or trust company in the state, or by using a negotiable instrument drawn on a financial institution or trust company.

HB 4116 will become effective June 7, 2026.

Submitted by: Michelle Druce, Executive Director of the Oregon Consumer League
www.oregonconsumerleague.org