Colorado Beats Fintechs on Law Barring ‘Rent-a-Bank’ Schemes (2)

Colorado won its bid to restore a law barring out-of-state banks from issuing loans that violate the state’s interest rate caps.

Colorado’s law targeting loans from banks chartered in other states opts the state out of a federal framework allowing interest rate portability and therefore isn’t preempted by federal law, the US Court of Appeals for the Tenth Circuit said in a split Monday ruling.

Where a loan is made “refers to loans in which either the lender or the borrower is located in the opt-out state,” allowing Colorado to block rates that violate its caps, Judge Gregory A. Phillips ...