American Lending Fairness Act of 2026
- Bill Number
- H.R. 7866
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-03-09: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-06-09T08:05:45Z
AI-Generated Summary
Purpose
The American Lending Fairness Act of 2026 (H.R. 7866) aims to restore fairness in interest rates for loans by state-chartered banks and credit unions. It allows states to opt out of federal rules that let banks charge interest rates based on their home state's laws (even for out-of-state borrowers), but only for loans made by banks chartered in that same state.
Key Provisions
- Amendments to Federal Deposit Insurance Act (Section 27): Adds a new subsection (c) allowing a state to pass a law or certify voter approval to exclude its own state-chartered insured depository institutions (banks) from federal interest rate exportation rules. This applies to loans made (or commitments entered) after the opt-out date.
- Amendments to Federal Credit Union Act (Section 205(g)): Adds a similar provision for state-chartered insured credit unions.
- Repeal of Prior Law: Eliminates Section 525 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (an old rule on state opt-outs).
- Retroactive Application: Any prior state laws or voter approvals under the repealed section now follow the new rules.
Significant Changes to Existing Law
- Limits State Opt-Outs: Previously, federal law (via preemption, where national rules override state laws) allowed all banks to "export" their home state's interest rates nationwide. This bill narrows opt-outs to only affect a state's own chartered institutions—out-of-state banks remain protected by federal parity.
- Replaces Broader Opt-Out: Repeals and refines an outdated 1980 law that allowed states more flexibility to impose local interest rate caps (usury laws) on all lenders.
Potential Impacts
- On Lenders: State-chartered banks and credit unions in opting-out states may face stricter local interest rate limits (usury caps), potentially reducing their ability to offer high-rate loans and affecting profitability or competitiveness against national banks.
- On Borrowers: Could lead to varied loan terms by state, possibly lowering rates in opt-out states but limiting credit access for high-risk borrowers.
- On Government Agencies: FDIC (oversees banks) and NCUA (oversees credit unions) must enforce the new opt-out rules, increasing state-federal coordination.
- On International Relations: Minimal direct impact, as it focuses on domestic U.S. lending.
Main Stakeholders
- State-chartered banks and credit unions: Gain state protection but lose nationwide rate flexibility.
- National (federally chartered) banks: Largely unaffected, maintaining exportation parity.
- State governments: Empowered to protect local institutions via opt-outs.
- Borrowers and consumers: Affected by potential changes in loan availability and rates.
- Federal regulators (FDIC, NCUA): Responsible for implementation.
Notable Implications
- Legal: Reinforces federal preemption under the Commerce Clause while respecting state sovereignty (federalism), potentially reducing litigation over conflicting state usury laws.
- Constitutional: Balances interstate commerce protections with states' rights to regulate local businesses.
- Political: Promotes "fairness" for state institutions against larger national competitors, without broadly dismantling federal uniformity in lending.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Davidson, Warren [R-OH-8]
Cosponsors (4)
Rep. Barr, Andy [R-KY-6], Rep. Horsford, Steven [D-NV-4], Rep. McBride, Sarah [D-DE-At Large], Rep. Gonzalez, Vicente [D-TX-34]
Recent Actions
- 2026-03-09: Referred to the House Committee on Financial Services.
- 2026-03-09: Introduced in House
- 2026-03-09: Introduced in House
Bill Versions
- American Lending Fairness Act of 2026 — issued 2026-03-09 — PDF (3 pages)