Committee hears HB 2561 to opt Oregon out of federal interest‑rate export rule amid split between consumer advocates and fintech/lenders

The House Committee on Commerce and Consumer Protection held a public hearing on HB 2561 on Jan. 28. The bill would exercise Oregon’s statutory right to opt out of a federal provision that allows out‑of‑state chartered banks to export their home state’s interest rates (commonly referenced in testimony as the Depository Institutions Deregulation and Monetary Control Act of 1980). The bill also would clarify that Oregon’s interest‑rate cap applies to consumer finance loans made to Oregon residents via the internet and modernize licensing by requiring use of the Nationwide Multistate Licensing System (NMLS).

Department of Financial Regulation officials said some fintech companies use "rent‑a‑bank" arrangements — partnering with out‑of‑state state‑chartered banks — to make loans that exceed Oregon’s 36% interest‑rate cap on small‑dollar consumer finance loans. TK Keane, administrator of the Division of Financial Regulation, told the committee the division recently identified five such rent‑a‑bank schemes during examinations and that two were not complying with Oregon’s cap. "Some fintech companies exploit legal loopholes by partnering with out of state chartered banks, enabling them to issue loans far in excess of Oregon's cap," Keane said.

Jesse O'Brien, policy manager at the Division of Financial Regulation, explained the proposed statutory change: "This federal law enables out of state state chartered banks to export their home state's interest rates and make loans consistent with their home state's cap which may be higher than Oregon's or in some cases non existent. And crucially the federal law explicitly provides a mechanism for states to opt out of this and prohibit the exportation of interest rates by passing a law clearly stating the intent to do so and House Bill 2561 would accomplish this opt out."

Supporters argued the opt‑out is a necessary consumer‑protection fix. Hannah Osmond of Oregon Consumer Justice said the federal rule "allows state chartered financial institutions to charge the interest rates permitted in their home state across the country" and that opt‑out would prevent out‑of‑state entities from sidestepping Oregon's cap. Brenna Stevens (written testimony) said loans exceeding Oregon’s 36% cap can reach "160% or more" and described cycles of repeat borrowing and fees that she said trap borrowers in long‑term debt.

Industry and fintech representatives warned the opt‑out would reduce access to credit for higher‑risk borrowers and disadvantage state‑chartered banks. JL Wilson, testifying for Elevate, said their typical Oregon customer has a roughly 560 credit score and pays for short‑term installment products the company offers; he described an average Elevate loan of about $1,500 with APRs near 98–100% and said those products serve borrowers who lack access to traditional loans. Phil Goldfeder of the American Fintech Council said the opt‑out is a "blunt and legally questionable" instrument that would shrink credit availability and harm state chartered banks; Elora Rahan of the American Financial Services Association warned that state opt‑outs historically narrowed credit access, and outside counsel Hava Brandress warned the committee that Colorado’s recent DIDMCA opt‑out was enjoined by a federal judge and that similar litigation risk exists for any state adopting an opt‑out.

Several witnesses cited empirical analyses. The Division of Financial Regulation told the committee that, in recent examination cycles, there were approximately 800,000 consumer finance loans in Oregon totaling about $1,100,000,000 conducted within state law; years‑old market examples and a 2022 Federal Reserve study of a similar Illinois cap were cited by industry witnesses as evidence that abrupt cutoffs can reduce credit availability for subprime borrowers.

The bill also contains a technical licensing change: requiring consumer finance applicants to use NMLS background checks to help identify criminal history outside Oregon. DFR staff noted they expected to file a dash‑1 amendment to clarify territoriality language.

No committee vote was recorded; the hearing was limited to testimony and the committee closed the public hearing at the end of the session.

Actions taken: committee held and closed a public hearing on HB 2561; no formal vote recorded during the hearing.