On September 16, the Colorado Attorney General filed a
brief in the U.S. Court of Appeals for the Tenth Circuit, urging the court to reverse a District Court’s preliminary injunction against enforcement of Colorado’s UCCC against state-chartered banks not located in Colorado providing loans to Colorado residents.
As previously covered by InfoBytes, the U.S. District Court for the District of Colorado granted a preliminary injunction to prevent the state from enforcing the UCCC, which would have opted Colorado out of Section 521 of DIDMCA and treat loans made to Colorado residents as “made” in Colorado and thus making those loans subject to the state’s usury limits of the UCCC. The defendants argued DIDMCA preempted state interest rate caps based on where the loan was made, and not the bank’s location. In this case, the defendants contended that a loan was “made” in any state where either the bank or borrower was located.
The defendants further maintained that the District Court failed to balance the harms correctly in granting the preliminary injunction, which could lead to irreparable harm to Colorado consumers. The brief stated that the District Court’s interpretation undermined the state’s ability to protect its residents from high-interest loans by out-of-state banks.
