Colorado’s Attack on State-Bank Lending Partnerships Gets New Life

On November 10, 2025, the United States Court of Appeals for the Tenth Circuit issued an reversing a district court’s order that the State of Colorado could not apply the interest rate caps in its Consumer Credit Code to loans made by state-chartered banks outside Colorado. The Tenth Circuit held that a state opt-out under Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) encompasses loans in which either the borrower or lender are located in the opting-out state. Thus, state banks chartered and operating in states imposing usury rates higher than those in Colorado cannot export those rates on loans made to Colorado residents under Section 521.

In a well-reasoned dissent, Judge Rossman determined that Sections 521 and 525 DIDMCA were about regulating banks, rather than protecting consumers. Therefore, he concluded, Section 525 did nothing more than preserve a state’s prerogative to remove its own banks from the rate exportation scheme created by Section 521. According to Judge Rossman, the majority’s ruling will, once again, place state-chartered banks outside of Colorado at a significant competitive disadvantage to national banks—a problem DIDMCA was enacted to solve.

Because many bank-fintech lending partnerships involve state-chartered banks, this decision—should it stand—will complicate the operations of those platforms that seek to lend to Colorado residents. Loans made to Coloradans would be required to comply with Colorado interest-rate limits, even if the bank otherwise offers a higher rate or range of rates uniformly across many or all other states. If other states follow Colorado’s lead, state-bank partnerships could confront a patchwork of interest rate limits that undermine their ability to offer products nationally at scale.

Given the weighty issues in this case, the panel split. Given the Tenth Circuit’s acknowledgement that its decision “may cause some immediate uncertainty,” the plaintiffs likely will petition for rehearing en banc and certiorari, stressing the decision’s negative impact both on the availability of consumer credit and the nation’s dual-charter banking system.

Finally, it is worth noting that this decision has no effect on the ability of nationally chartered banks to export interest rates at levels allowed by their home states. National banks, supported by OCC Comptroller Jonathan Gould’s statements concerning his work to chart a path permitting banks ready to partner with fintechs, are positioned to move further into the bank-partnership marketplace.

Please reach out to any of the authors or the Manatt professional with whom you work if you need assistance navigating the impact of this decision and actions that may be taken in other states.