We are following very closely this appeal to the 10th Circuit of the preliminary injunction issued by the Federal District Court for the District of Colorado to the plaintiffs (three trade groups) enjoining the Colorado Attorney General and UCCC Administrator from enforcing the new Colorado opt-out statute against out-of-state, state banks who made loans from out-of-state to Colorado residents. (In the District Court, we filed an amicus brief supporting the plaintiffs on behalf of the American Bankers Association and Consumer Bankers Association. At present, the statute applies only to state banks located in Colorado that make loans to residents of Colorado or elsewhere.

(By way of a refresher, Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”) empowers states to opt-out of Section 521 of DIDMCA with respect to “loans made” in the opt-out state. Section 521 of DIDMCA confers on state chartered, FDIC-insured banks the same usury authority that national banks have enjoyed under Section 85 of the National Bank Act, which, because of the 1978 Supreme Court opinion in Marquette National Bank v. First of Omaha Services Corp., includes the right to charge borrowers throughout the country the same interest which is allowed by the state where the national bank is located. This is called the right to export interest. Colorado enacted a statute last year which purported to thwart this exportation right.)

On August 6, 2024, the Tenth Circuit set the following briefing schedule: “Appellant’s brief and appendix must be filed on or before September 16, 2024. Appellee may file a response brief within 30 days after service of appellant’s brief. If a response brief is filed, Appellant may file a reply brief within 21 days after service of appellee’s brief.”

In the District Court, Colorado filed a motion asking the Court to stay the preliminary injunction pending the outcome of the appeal. It has not been decided yet by the District Court, but the Court will surely deny the motion since it requires a showing that the movant is likely to prevail on the merits of the appeal. Colorado needed to first seek a stay from the District Court in order to seek a stay of the injunction from the Tenth Circuit, where it will also have to persuade the Court that it is likely to prevail on the merits.

The outcome of this case is of extraordinary importance to state banks engaged in interstate lending by themselves or partnered with non-bank fintech companies. A win for Colorado is likely to spawn a number of similar statutes throughout the country.

[View source.]