National Ass’n of Industrial Bankers v. Weiser.
No. 24-1293. 11/10/2025. D.Colo. Judge Phillips. Depository Institutions Deregulation and Monetary Control Act of 1980—12 USC § 1831d—Opt-Out Provision—Location of Lenders and Borrowers—Preliminary Injunction.
November 10, 2025
In 2023, Colorado opted out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA) and announced its intent to enforce Colorado’s interest rate caps on loans from state banks to Colorado borrowers. Colorado opted out under 12 USC § 1831d to protect its residents from “rent-a-bank” arrangements—where nonbank lenders partner with banks chartered in states that have high or no interest rate caps—that allow nonbank lenders to export high interest rates to states that would otherwise bar those rates under their own laws. Three trade associations with state bank members (collectively, the banks) sued Colorado’s attorney general and administrator of the Colorado Uniform Consumer Credit Code (UCCC) in their official capacities (collectively, defendants) and moved to preliminarily enjoin defendants from enforcing Colorado’s interest rate caps against out-of-state banks lending to Colorado residents. The banks argued that Colorado’s opt-out for “loans made in such State” encompassed only loans made by state banks located in Colorado. The district court preliminarily enjoined defendants from enforcing Colorado’s UCCC against the Banks’ members if the members (1) are located outside of Colorado and (2) make loans at interest rates exceeding Colorado’s interest rate caps to Colorado borrowers. The district court also stated that defendants may enforce the UCCC’s interest rates against only lenders located in Colorado, regardless of the borrower’s location.
On appeal, defendants argued that the district court erroneously evaluated three of the four preliminary injunction factors: the likelihood of success on the merits, the balance of equities, and the public interest. DIDA sets a national standard for interest rates that state-chartered banks may charge on loans. Through § 1831d, Congress preempted state law that capped interest at lower rates and gave state banks access to the same interest rates set for national banks. But § 1831d allows a state to opt out of the national standard for “loans made in such State.” For state banks, any loan “made in” the opt-out state is subject to that state’s interest rate caps, even if such cap is lower than the rate otherwise allowed under § 1831d. As to the first factor, defendants asserted that the banks have no viable cause of action and that a state may opt out of § 1831d for loans in which only the borrower, not the lender, is in the opt-out state. The district court ruled for the banks on this factor after determining that (1) the banks have a cause of action through a claim in equity under Ex parte Young, 209 U.S. 123 (1908), under which private parties may sue state officials in federal court to enjoin ongoing violations of federal law; and (2) a loan is “made in” only the lender’s state, meaning Colorado can opt out of § 1831d for only loans made by lenders in Colorado. The Tenth Circuit first concluded that the banks have a valid cause of action for a claim in equity, as recognized in Ex parte Young. Second, whether § 1831d’s opt-out provision includes loans from out-of-state banks to borrowers in the opt-out state is an issue of first impression. The Tenth Circuit concluded that § 1831d’s plain language unambiguously provides that “loans made in such State” refers to any loan in which either the lender or the borrower is located in the opt-out state. Because § 1831d does not prevent defendants from enforcing the UCCC against out-of-state banks, the banks failed to show that they are likely to succeed on the merits, and the district court abused its discretion at the first preliminary injunction factor.
For the merged third and fourth factors, defendants argued that the district court incorrectly balanced the harms because Colorado validly opted out of § 1831d, so it is against the public interest to enjoin the proper enforcement of state law. Here, the district court determined that the balance of harms favored the banks because (1) the harm to Colorado borrowers is minimal, given that national banks make loans at rates prohibited by Colorado’s interest rate caps; (2) the banks made a strong showing that the interest rate caps would disadvantage their state bank members compared to national banks; and (3) the public interest supports enjoining enforcement of a preempted state law. Having concluded that § 1831d does not preempt Colorado’s interest rate caps for loans from out-of-state banks to Colorado borrowers, the Tenth Circuit thus found that (1) even if the banks made a strong showing that Colorado’s interest rate caps would disadvantage their state bank members compared to national banks, Colorado can lawfully make this policy choice by opting out of § 1831d; and (2) the public interest counsels against enjoining a validly enacted law. Accordingly, the balance of equities favors defendants. The district court therefore abused its discretion in granting the preliminary injunction.
The preliminary injunction was reversed and the case was remanded for further proceedings.