Dual Banking Bill Introduced

02/18/26

Last week, Senator Bernie Moreno (R-OH) and Representative Warren Davidson (R-OH) introduced the American Lending Fairness Act of 2026, bipartisan legislation designed to strengthen federal lending standards and preserve the long-standing balance between state and national banking authority. OBL issued a statement supporting the bill's introduction, underscoring its importance to community banks and the future of the dual banking system.

The legislation addresses growing legal uncertainty surrounding interstate lending following recent court decisions that allowed individual states to impose their own interest-rate caps on loans made by out-of-state, state-chartered financial institutions. According to Senator Moreno, when states apply conflicting rules across borders, "hardworking Americans…feel the pain" through reduced access to credit and fewer competitive lending options.

At the center of the proposal is a targeted update to the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) - the federal law that established parity between state-chartered and nationally chartered banks by allowing institutions to export interest rates permitted in their home state when lending nationwide.

Recent litigation, including a Tenth Circuit ruling tied to Colorado's opt-out authority, created uncertainty by allowing states to extend their interest-rate restrictions to lenders chartered elsewhere. OBL warned that this interpretation threatens decades of interstate banking precedent and undermines competitive equality between bank charters.

The American Lending Fairness Act would clarify that state opt-outs apply only to institutions chartered within that state - restoring Congress's original intent and ensuring that state-chartered banks can continue operating across state lines under consistent national standards.

For state-chartered banks, the issue is not theoretical. Interstate lending authority is a foundational element of modern banking competition. Without clear federal rules, state-chartered banks could face a patchwork of conflicting state laws, placing them at a competitive disadvantage relative to nationally chartered institutions. OBL emphasized that ensuring state-chartered banks can compete on a level playing field is essential to maintaining consumer choice and access to affordable credit nationwide.

Notably, this effort is being led entirely by Ohio's congressional delegation. The introduction of bicameral legislation by Senator Moreno and Congressman Davidson signals that Ohio lawmakers are taking a leadership role in shaping national banking policy at a critical moment for the industry. Through ongoing advocacy, education, and direct engagement with policymakers, the Ohio Bankers League has worked to elevate the importance of preserving DIDMCA parity and protecting the dual banking system. The introduction of the American Lending Fairness Act represents a clear example of Ohio bankers' priorities translating into federal legislative action.