Attorney General Bonta to Congress: As Unaffordability Surges, States Must Retain the Power to Limit Interest Rates, Protect Consumers from Financial Exploitation

OAKLAND - California Attorney General Rob Bonta joined a coalition of 18 attorneys general in sending a letter to Congress opposing a U.S. House of Representatives bill, H.R. 7866, which would eliminate states' ability to opt out of the interest-rate preemption provisions of the Depository Institutions Deregulation and Monetary Control Act (DIDMCA). H.R. 7866 would disempower states from protecting borrowers by eliminating states' power to enforce state usury laws, which set maximum legal limits on the interest rates that lenders can charge consumers as to certain loans.

"States play a crucial role in consumer financial protection. California has laws protecting consumers from predatory lending, including when it comes to how much interest banks can charge consumers," said Attorney General Bonta. "Through H.R. 7866, Congress is attempting to preempt these important laws, slashing states' rights to protect consumers, and leaving Californians paying more. Alongside a coalition of attorneys general, I'm asking Congress to reject H.R. 7866. Especially amid a crisis of affordability, we must remain laser focused on championing policies that protect consumers from high-cost lending."

BACKGROUND

Banking and consumer protection are core areas of states' historic enforcement ability. States have a strong interest in sound financial institutions and honest financial practices because they are essential to the health of states' economies and their resident's financial wellbeing. Under Section 521 of DIDMCA, state-chartered banks can charge the interest rate allowed by the state where the bank is located, regardless of where a borrower lives, thereby preempting state interest-rate caps by charging more than the state where the borrower lives would typically allow. However, Section 525 of DIDMCA provides an opt-out right for states: a state can enact legislation to opt out of the federal interest-rate preemption for loans made in its state.

TODAY'S LETTER

In the letter, the attorneys general argue that in passing DIDMCA, Congress acknowledged the importance of states' role in regulating interest rates by creating the Section 525 opt-out. This opt-out right has only become more important as nonbank lenders have increasingly exploited interest-rate preemption by entering into sham partnerships with state banks in order to evade otherwise-applicable interest rate caps. For example, in 2023 the Colorado Attorney General found that one "rent-a-bank" operator was making thousands of loans in the state with annual interest rates in excess of 100%, resulting in significant default rates that harmed consumers' credit scores and access to more affordable future credit. Section 525 opt-out is an important tool for states to protect consumers, and H.R. 7866 would rob state legislatures of this important right, facilitate the actions of predatory lenders, and limit states' ability to protect their citizens from high-cost lending.

In July 2026, Attorney General Bonta joined a multistate amicus brief in National Association of Industrial Bankers v. Weiser, supporting Colorado's argument that DIDMCA opt-out from preemption allows a state to apply its usury laws to loans made in that state by out-of-state lenders.

In sending the letter, Attorney General Bonta joins the attorneys general of Oregon, Arizona, Colorado, Connecticut, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Virginia, Washington.