When the House Financial Services Committee voted 31-18 to advance the American Lending Fairness Act (H.R. 7866) on Wednesday, it did more than move what seems like a wonky, technical banking bill through committee. It took a meaningful step toward fixing a problem building across U.S. states for years: legislatures using a narrow, decades-old opt-out provision to unwind the interstate lending framework that has underpinned consumer credit since 1980.

The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) has never been controversial in the lens it’s suddenly being viewed through today. For more than four decades it simply did one thing: allow state-chartered banks and credit unions to export interest rates across state lines on the same terms as their nationally chartered competitors. 

In practice, this created a dual banking system working as designed, and it’s why community banks and credit unions in Ohio can compete with national banks headquartered in New York or Delaware without a competitive handicap.

What’s recently changed is that a small number of states—Colorado, Oregon, and now Rhode Island—are pursuing similar paths. They have started using DIDMCA Section 521’s opt-out as a blunt instrument to reach beyond their own chartered institutions and impose their rate caps on lending relationships that have nothing to do with banks they charter. 

Oregon’s HB 4116 is a clear example: It doesn’t just regulate Oregon-chartered banks; it tries to unwind fintech-bank partnerships wholesale, on the theory that if it can’t touch the bank directly, it will choke the partnership instead.

The American Lending Fairness Act fixes this cleanly. It clarifies that a state’s opt-out only reaches loans made by institutions that state itself charters. Colorado can regulate Colorado-chartered banks. Oregon can regulate Oregon-chartered banks. Neither can reach into Utah or Delaware and dictate terms for federally recognized bank partnerships that happen to serve their residents. That’s not a loophole for predatory lenders—it’s the plain, original meaning of the opt-out, and it preserves rather than erodes state authority over the institutions each state actually charters.

The real-world stakes here are not abstract. 

As I argued in my piece on Oregon’s crackdown, when states impose strict rate caps, lenders leave rather than offer credit at a loss. The people left behind aren’t wealthy borrowers with rich menus of credit options. They’re working-class families covering a car repair or a medical bill who now have three choices: an illegal lender, an overdraft fee spiral, or no help at all. Oregon’s own legislative testimony acknowledged thousands of loans above the state’s 36% cap going to residents every year. Eliminating those loans doesn’t eliminate the need—New York Fed research on state rate caps shows the credit that disappears for the riskiest borrowers doesn’t come back cheaper; it’s rationed away or reallocated to safer borrowers, leaving the people the caps were meant to protect with fewer options, not better ones.

There’s a broader pattern here too. States that pile on regulatory uncertainty for financial innovation are sending a signal to capital and entrepreneurs, and capital is listening. U-Haul’s data shows Americans continuing to leave high-regulation states for lower-tax, lower-regulation ones, and Census projections suggest that migration could cost slower-growth states like Oregon congressional seats after 2030. 

Even individual founders are voting with their feet: Starbucks’ Howard Schultz is relocating from Washington state to Florida. Financial services innovation will follow the same logic: Fintech-bank partnerships that expand credit access for underserved Americans will build where the legal ground is stable, not where a legislature can retroactively unravel a lending relationship on ideological grounds.

A federal fix is the right answer precisely because credit markets are national. A patchwork where every state legislature can redefine DIDMCA’s scope on its own terms guarantees exactly the kind of legal uncertainty that shrinks access rather than protecting consumers. Congress should finish the job the Committee started last week, and the Senate should move S. 3889 without delay.

Consumer protection and credit access aren’t opposing goals—but only if lawmakers write policy that expands both. Oregon-style opt-outs fail that test. The American Lending Fairness Act passes it.