Cordray, Gruenberg Back Colorado In High-Stakes Interest Rate Appeal
By CU Today Staff —
DENVER—Former FDIC Chairman Martin Gruenberg and former Consumer Financial Protection Bureau Director Richard Cordray are urging the full Tenth Circuit to allow Colorado to enforce its interest-rate limits on loans made to state residents by out-of-state, state-chartered banks.
In an amicus brief filed July 15, the former FDIC board members argued that a loan is “made” in Colorado when either the lender or borrower is located there. They said the lower court wrongly treated the bank as the loan’s sole maker, contending a loan is a contract requiring participation by both lender and borrower.
The dispute centers on Colorado’s 2023 decision to opt out of a federal law that generally permits state-chartered banks to charge rates allowed in their home states when lending across state lines. A divided Tenth Circuit panel previously ruled Colorado could apply its rate limits to out-of-state banks lending to Colorado borrowers, reversing a preliminary injunction obtained by three financial-services trade groups.
The full appeals court agreed in April to rehear the case, vacating the panel judgment and reopening the dispute. Gruenberg and Cordray also criticized the current FDIC for abandoning its earlier support for Colorado; the agency now backs the industry challengers and argues Colorado’s law should apply only to loans made by banks located in the state. Oral arguments before the en banc court are scheduled for Aug. 18.
Originally reported by CU Today.