States reclaim power to cap interest rates—but only for their own banks
S. 3889 — American Lending Fairness Act of 2026 · Filed by Bernie Moreno (R-OH) · 1 cosponsor · Introduced Feb 12, 2026 · Referred to committee
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What it does
This bill allows states to opt out of federal interest-rate caps on loans made by their own state-chartered banks and credit unions, but only for those in-state institutions—not for out-of-state lenders. It repeals the existing federal preemption rule (Section 525 of the 1980 Deregulation Act) and replaces it with a narrower one: states can now reclaim authority over interest rates on loans from their own banks, but federal caps still apply to loans from out-of-state institutions operating in that state.
Why we flagged it
The bill's core function is to restore state authority over interest-rate regulation for in-state-chartered lenders by repealing a federal preemption rule and replacing it with a narrower opt-in mechanism. It is fundamentally about federalism and regulatory jurisdiction, not a consumer protection or lending-access measure per se.
What the text implies
- Repealing Section 525 and replacing it with a state opt-out mechanism may create regulatory fragmentation: a national lender operating across multiple states could face different interest-rate caps in each state, increasing compliance costs and potentially leading to market segmentation.
- States that do not opt out remain subject to federal preemption, meaning their residents cannot benefit from state-level interest-rate caps even if their state legislature wishes to impose them—the bill does not restore state authority universally, only for states that affirmatively opt out.
- The bill's language requires states to adopt a law or certify voter approval 'explicitly and by its terms' stating they do not want federal preemption to apply—a high bar that may discourage some states from opting out, effectively preserving federal preemption as the default.
- Out-of-state lenders remain subject to federal caps even in states that opt out for in-state institutions, potentially creating a two-tier lending market where in-state banks face state caps and out-of-state banks face federal caps, which may disadvantage in-state lenders or reduce their competitiveness.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Borrowers in states that opt out may benefit from lower interest-rate caps on loans from in-state institutions, improving access to cheaper credit. However, the bill simultaneously constrains out-of-state lending competition in those states, potentially reducing borrower choice and raising rates on out-of-state loans, and may fragment the national lending market in ways that harm borrowers in non-opting states or those seeking loans from larger national lenders.
Who stands to gain
- state-chartered banks
- state-chartered credit unions
- regional and community lenders
Named in the bill
Federal Deposit Insurance Act (Section 27), Federal Credit Union Act (Section 205(g)), Depository Institutions Deregulation and Monetary Control Act of 1980 (Section 525), state-chartered banks, state-chartered credit unions, out-of-state financial institutions
Where it stands
1 cosponsor: 1 Republicans.
- Feb 12, 2026 — Introduced · Congress.gov: “Introduced in Senate”
- Feb 12, 2026 — Referred to Senate Committee on Banking, Housing, and Urban Affairs · Congress.gov: “Read twice and referred to the Committee on Banking, Housing, and Urban Affairs”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
5 lobbying clients named this bill on 5 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $2,205,000 in lobbying spend. A filing names 16 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 78% of bills with at least one filing.
Bernie Moreno, the sponsor, reported $285,000 in PAC receipts in the 2026 cycle.
- Toyota Motor North America Inc (tma) — $1,930,500 on 1 filing
- American Fintech Council — $110,000 on 1 filing
- Center for Responsible Lending a Supporting Corp of Ctr for Community Self-help — $90,000 on 1 filing
- Bread Financial (fka Alliance Data Systems Corporation) — $40,000 on 1 filing
- National Association of Industrial Bankers — $34,500 on 1 filing
Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (1,869 characters) on Apr 16, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Jun 2026 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 20, 2026 · page rendered 2026-10-20.
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