Kraninger Calls For Passage Of Legislation Clarifying Section 525 Of DIDMCA

Proposed legislation that would clarify the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) is important to the health of the dual banking system, Kathleen Kraninger, President and CEO of the Florida Bankers Association, told the House Financial Services Committee at a hearing held on September 2, 2026 entitled “Strengthening the American Economy: Promoting Growth, Opportunity, and Prosperity.”

Congress passed DIDMCA to put state banks on par with national banks, Kraninger, former Director of the CFPB, told the House Financial Services Committee.

She said the recent efforts by Colorado and Oregon to use an opt-out from DIDMCA to regulate out-of-state banks could “undermine” the banking system and reduce access to credit by borrowers most in need of it.

H.R. 7866, sponsored by Rep. Warren Davidson, R-Ohio, and co-sponsored by Rep. Andy Barr, R-Ky., would amend Section 27 of the Federal Deposit Insurance Act, 12 U.S.C. § 1831d, to clarify the scope of the state opt-out provision in Section 525 of DIDMCA. The limited bill was introduced on March 9 and referred to the Financial Services Committee.

During the hearing, Davidson said some states are using “tortured language” to seek to justify using an opt-out as a basis to regulate state banks in other states. Litigation concerning the opt-out by Colorado and Oregon is ongoing.

Section 521 of DIDMCA permits a federally insured state-chartered bank to charge interest on a loan or other extension of credit at the rate permitted by the bank’s home state, including when the bank makes a loan or other extension of credit to a borrower in another state, whose laws are expressly preempted by Section 521. Section 525 of DIDMCA permits a state to opt out of that federal interest-rate preemption for loans “made in such State.”

H.R. 7866 would clarify that Section 525 was not intended to permit an opt-out state to regulate the interest rate that may be charged on a loan made by an out-of-state state bank to a resident of the opt-out state. Instead, the bill would make clear that the opt-out was intended only to prevent state-chartered banks located in the opt-out state from relying on Section 521 of DIDMCA—the provision that otherwise permits state-chartered banks to export their home-state interest rates when lending across state lines.

It was unclear when the Committee will act on the legislation.

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