U.S. Federal Appeals Court Vacates Injunction Against Colorado Rent-a-Bank Rate Limits
The U.S. Congress passed the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) in 1980, allowing out-of-state banks to charge borrowers interest rates permitted in the states where the banks are chartered. After Colorado opted out of the relevant provisions, it sought to restrict the rent-a-bank lending model used in partnerships between banks and fintech companies, with implications for the nationwide interstate credit market.
The U.S. Court of Appeals for the Tenth Circuit recently vacated a preliminary injunction that had barred Colorado from enforcing its interest-rate limits and sent the case back for further proceedings. The ruling was not a final judgment in the state's favor. The vacatur has been stayed before taking effect, so out-of-state banks and their fintech partners may continue applying existing interstate rates for now. The courts have yet to clarify the scope of future enforcement.
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The history behind this eventUS Appeals Court Signals Support for Banks in Colorado Rate-Cap Fight
The dispute turns on the Depository Institutions Deregulation and Monetary Control Act of 1980, or DIDMCA, which generally lets state-chartered banks export interest rates permitted in their home states. Colorado opted out in 2023 and sought to apply its caps to loans made to Colorado residents by out-of-state state banks. The banking industry says that reading would fracture a uniform interstate lending market and place state-chartered institutions at a competitive disadvantage to national banks, which remain protected by separate federal preemption.
Eleven judges of the U.S. Court of Appeals for the Tenth Circuit heard the case en banc in Denver on Aug. 18, with questioning suggesting the court may side with the National Association of Industrial Bankers and other trade groups. The court is reconsidering a Nov. 10, 2025, 2-1 panel ruling that backed Colorado; it vacated that judgment and granted rehearing on April 2, 2026. No decision was issued at the hearing. Colorado’s disputed limits include a maximum 36% annual rate on the first $1,000 of certain consumer loans.
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