Three national financial trade groups issued a joint statement Wednesday objecting to Colorado’s position in ongoing federal litigation over interstate banking regulations.
The National Association of Industrial Bankers, the American Financial Services Association, and the American Fintech Council released the statement after the state of Colorado filed a response in the 10th Circuit Court of Appeals related to its attempt to regulate certain out-of-state banks under the Depository Institutions Deregulation and Monetary Control Act (DIDMCA).
The litigation centers on Colorado’s decision to opt out of portions of the federal interstate banking framework established under DIDMCA, which governs how interest rates and lending terms are applied across state lines.
In the statement, the organizations said Colorado’s interpretation of its opt-out authority exceeds the limits established under federal law and could have consequences for consumers nationwide. The groups argued that the state’s approach threatens the stability of the dual state-federal banking system that has governed interstate lending for decades.
“Colorado’s attempted overreach threatens to raise costs, reduce access to credit, and make the system less fair for everyday Americans,” said Frank Pignanelli, executive director of the National Association of Industrial Bankers.
Celia Winslow, chief executive officer of the American Financial Services Association, said DIDMCA was designed to ensure consistent treatment between state and nationally chartered banks.
“Now, Colorado is attempting to regulate not just its state-chartered banks, but also banks chartered in other states,” Winslow said. “This is not what DIDMCA was intended to do.”
Phil Goldfeder, chief executive officer of the American Fintech Council, said the state’s actions come at a time when consumers are facing increased financial pressure.
“As consumers are struggling with an affordability crisis and tighter household budgets, Colorado is attempting to unravel the national credit framework that keeps financial access competitive and consistent across state lines,” Goldfeder said.
According to the statement, Colorado’s approach would allow lending terms to vary based on factors such as a consumer’s location or where a transaction occurs, rather than under a uniform national standard. The groups said this could result in conflicting state laws governing interest rates and fees.
The statement also cited concerns raised in a dissenting opinion by Judge Rossman, which warned that allowing states to impose lending requirements beyond their borders could undermine national credit markets and increase compliance costs for lenders. The groups said those costs could ultimately be passed on to consumers through higher prices, reduced access to credit, and fewer lending options.
The organizations further argued that state-imposed interest rate caps have historically reduced credit availability, particularly for lower- and middle-income borrowers and small businesses. They pointed to prior examples in states such as Arkansas and Illinois where lending activity declined following the adoption of rate caps.
In the statement, the groups said Colorado’s position could also accelerate consolidation in the banking sector by shifting lending activity toward federally chartered national banks, reducing competition among state-chartered institutions that serve local communities.
The National Association of Industrial Bankers, American Financial Services Association, and American Fintech Council said they will continue urging the appeals court to reject Colorado’s legal position, arguing that Congress established clear limits on state opt-outs under DIDMCA to preserve a consistent national banking framework.
