WASHINGTON, D.C. — Today, the House Financial Services Committee passed Representative Warren Davidson’s (R-OH) American Lending Fairness Act of 2026 (H.R. 7866). This legislation stops states from forcing their own interest rate limits onto loans made by banks and credit unions chartered in other states.
 
"Borrowers should be free to shop for whatever loan works best for them, regardless of which state the lender is chartered in,” said Davidson. “My American Lending Fairness Act protects that freedom by putting state-chartered banks and credit unions on equal footing with the largest national banks. When more lenders compete for business, borrowers get better rates. I'm proud to see this bill move forward, and I look forward to a full House vote."
 
Read the full text of the bill HERE.
 
Watch Davidson’s remarks HERE.
 
Background:
The Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) was enacted to deregulate deposit-rate limits, extend the Federal Reserve’s monetary policy reach across depository institutions, and make competition fairer amongst banks and credit unions. Today, two sections of DIDMCA, Section 521 and Section 525, are prevalent in discussion of usury laws.

• Section 521: Allows FDIC-insured, state-chartered banks charge the interest rate allowed in their home state, or a specified federal alternative, despite conflicting state usury caps.
• Section 525: Allows a state to expressly opt out of Section 521’s interest-rate rules for loans “made in” that state.

The Issue: The legal meaning for the term “made in” is highly disputed. The key question is whether a loan is “made in” a state based on the bank’s location and lending activity, the borrower’s location, or both. This distinction determines whether a state’s DIDMCA opt-out can limit an out-of-state state-chartered bank’s interest rate for loans to that state’s residents.

The Fix: The American Lending Fairness Act of 2026 would eliminate the dispute over where a loan is “made in” by replacing DIDMCA’s Section 525 opt-out framework. Under this bill, a state could cap rates charged by institutions it charters, but it could not use its opt-out to restrict an out-of-state state-chartered bank or credit union lending to that state’s residents.

Why it Matters: A borrower-location rule could enable every opt-out state to impose its own interest rate cap on loans to its residents from state-chartered banks nationwide. This would undercut the federal rate exportation parity DIDMCA gave state banks relative to national banks.

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