Oregon committee hears heated debate over bill to block out‑of‑state lenders from exporting triple‑digit rates

SALEM, Ore. — The Senate Committee on Labor and Business heard more than four hours of testimony on Feb. 23 over House Bill 4,116, a measure that would opt Oregon out of the Federal Depository Institutions Deregulation law’s rate‑exporting provision so that state‑regulated lenders must abide by Oregon’s 36% statutory cap on consumer finance loans.

Representative Nathan Sosa, the bill sponsor, said the measure is aimed at online lending arrangements that pair with out‑of‑state banks to offer Oregonians loans with “triple‑digit” annual percentage rates. “These online lenders are teaming up with banks in Utah … and under [that] arrangement they are lending to Oregonians at rates anywhere from 73% up to over 200%,” Sosa said, adding that his office found roughly 22,000 such loans over recent years and that the typical loan size is about $3,000.

The bill is supported by consumer advocates and community lenders who described the loans as debt traps for people in financial distress. Angela Donnelly of Oregon Consumer Justice told the committee that the opt‑out “will safeguard consumers from exploitive lending practices and foster a fair marketplace.” Ellen Harnick of the Center for Responsible Lending said that, in her view, opt‑out targets the most egregious uses of so‑called rent‑a‑bank arrangements and will protect families from prolonged spirals of debt.

State regulators from the Oregon Department of Consumer and Business Services (DCBS) provided data on the market and on agency enforcement. TK Keane, administrator of the Division of Financial Regulation, described multiple forms of rent‑a‑bank partnerships and said administrative enforcement is possible for violations of the Consumer Finance Act. Jesse O’Brien, policy manager at the division, noted that consumer finance lending in Oregon totaled roughly $1.6 billion in 2024 and that DCBS has identified millions of dollars in lending they consider noncompliant (DCBS cited nearly $24 million in 2025 alone and roughly $61 million over multiple years tied to rent‑a‑bank arrangements).

Opponents from fintech trade groups, payments processors and some bank partners argued the bill would not eliminate high‑cost lending but instead shift it to national banks, federally chartered lenders or sovereign lenders beyond state reach. Ashley Urisman of the American FinTech Council said, “HB 4,116 does not stop nationally chartered banks from offering these products,” and warned the measure could put Oregon‑chartered banks at a competitive disadvantage. WebBank’s general counsel, Paris Sands, told the committee that the bill “will only affect state charter banks” and said empirical research shows the opt‑out could reduce credit availability for higher‑risk borrowers.

Industry witness JL Wilson, representing Elevate, and Thomas Coleman of Opportunity Financial said their products are individually underwritten, do not rely on rollovers or stacking and provide short‑term emergency liquidity for borrowers who otherwise lack options. Wilson said her company’s loans have no fees and argued they are “far more consumer friendly than what Oregon currently allows” under some existing state products.

Committee members pressed both sides on the likely real‑world consequences. Senator Drazen recounted personal experience of financial strain and said he was concerned that cutting options could leave families without means to cover emergencies; other members asked DCBS for more granular data on who receives these loans, what fees and charges are actually applied, and how many borrowers could be displaced. DCBS and Legislative Counsel were asked to respond in writing to member questions before a follow‑up hearing.

Legal uncertainty is a central theme of the debate: several witnesses described ongoing litigation over similar opt‑outs in other states, most prominently Colorado, which opponents say shows risk of prolonged lawsuits and costs to state defendants. Supporters pointed to favorable rulings and argued that opt‑out is a valid exercise of state authority to enforce its consumer‑protection laws. The differences in legal interpretation — whether an opt‑out can reach out‑of‑state state‑chartered banks that facilitate lending to residents — were a recurring point of contention in testimony.

The committee did not vote. Instead, Chair Taylor said members should submit additional questions by noon the next day, asked DCBS and Legislative Counsel to reply by 6 p.m., and scheduled a continued public hearing and a work session on Wednesday, Feb. 25. No formal motions or votes on the measure occurred during this hearing.

What happens next: The committee will carry over the public hearing and meet Feb. 25 for a work session and potentially additional testimony. Staff will circulate member questions and DCBS/Legislative Counsel responses to inform the committee’s deliberations.