Bill limits how far states can go in capping out-of-state bank loan rates

What does this do?

HR 7866 clarifies the boundaries of existing federal law, which allows banks and credit unions to charge the interest rate permitted in their home state, even when lending to borrowers in other states. The bill specifies that a state's opt-out from this federal rule applies only to lenders the state itself charters, not to out-of-state lenders. States that have tried to apply opt-outs broadly would see that authority narrowed.

Who does it affect?

The bill directly affects banks, credit unions, and borrowers, particularly those seeking personal loans in states with strict interest rate caps. State governments that have enacted broad interest rate limits would have their regulatory reach reduced under this bill.

Why does it matter?

Borrowers in states with lower rate caps may continue to receive loan offers from out-of-state lenders charging higher rates permitted by those lenders' home states. State governments would retain rate-setting authority only over the banks and credit unions they license, not over lenders operating across state lines.

Where does it stand?