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Oregon committee hears testimony on bill to block out‑of‑state lenders from sidestepping 36% rate cap
Summary
The House Committee on Commerce and Consumer Protection held a Feb. 3 hearing on HB 4,116, which would opt Oregon out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 to prevent some out‑of‑state lenders from using federal preemption to charge rates above Oregon's 36% APR cap. Supporters said it restores state authority; opponents warned it could reduce access to small emergency credit.
Chair Sosa opened a public hearing Feb. 3 on House Bill 4,116, a proposal to opt Oregon out of Section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 so that Oregon's 36% APR cap on consumer finance loans would apply to loans made to Oregonians even when a lender is chartered in another state.
"Almost 20 years ago, Oregon said that the maximum interest rate that can be charged by a lender for a consumer finance loan is 36%," Representative Nathan Sosa said, describing a set of cases in which out‑of‑state lenders partner with state‑chartered banks to rely on federal law and charge much higher rates. "Instead of capping their interest rates at 36% like everybody else, this handful of lenders is making loans with interest rates of 73% to over 200%."
Sponsors said the bill would clarify jurisdictional standards for when Oregon law applies (for example, loans negotiated while a consumer is physically present in Oregon or repaid through Oregon‑based accounts), align licensing with multistate registry processes, and strengthen transparency and enforcement. "This bill restores balance by clarifying when Oregon's consumer finance laws apply," Representative Lamar Wise said.
Opponents from the fintech and subprime lending sectors urged caution and said the proposal risks removing access to credit for borrowers with limited options. JL Wilson of Elevate Bridal Services said his organization serves borrowers with credit scores around 550 and that average loans in his marketplace are about $1,500–$2,000 with 18–24 month payback periods; he warned the bill could push people toward collateralized or unregulated options. Phil Goldfeder of the American Fintech Council said "98% of those comply" with Oregon law and called an opt‑out a "blunt tool" that could harm consumers by shrinking access.
State regulators told the committee enforcement is resource‑intensive but that problems exist in the market. TK Keane, administrator at the Division of Financial Regulation, and policy manager Jesse O'Brien said their teams have identified thousands of loans that appear to exceed the state cap; O'Brien cited roughly $2.324 billion in loans above the cap in 2025 with an average observed loan size around $2,500, and the division has identified about 22,000 loans since 2020 that exceed the cap. Regulators said proving which party in a bank–fintech arrangement is the "true lender" requires case‑by‑case litigation and that a statutory opt‑out could create a clearer enforcement standard.
Speakers also flagged unresolved legal questions. Outside counsel Hava Brandris, representing industry parties, told the committee that Colorado's similar opt‑out has been enjoined in federal court and remains the subject of appeals, noting litigation over whether a state can regulate out‑of‑state chartered banks that do not operate within the opting state.
The committee closed the public hearing on HB 4,116 without a committee vote. Chair Sosa said members may follow up with presenters and staff for additional materials and data as they consider next steps.
