10th Circuit’s DIDMCA Decision Is the First of Many in Bank Partn

Editor’s note: The original 10th Circuit panel decision discussed below was vacated on April 2, 2026, when the court granted rehearing en banc. Even so, the opinion’s reasoning already changed strategy, compliance planning, and legislation across the bank-partnership market.

Bank-fintech partnerships have spent the past few years living in a legal house with several smoke alarms and no quiet room. One alarm is “true lender.” Another is “valid-when-made.” A third is “who gets to export what rate into which state.” Then along came the 10th Circuit’s decision in Colorado’s DIDMCA fight, and suddenly the whole neighborhood started checking the wiring.

That is why the 10th Circuit’s now-vacated panel opinion matters so much. It was not just another appellate ruling with a long caption and a short shelf life. It was the first major appellate reading of a state’s opt-out power under the Depository Institutions Deregulation and Monetary Control Act of 1980, or DIDMCA, and it struck directly at a core assumption behind many state-bank partnership models: that the bank’s home state usually controls the rate. In plain English, the court said the borrower’s state could matter a lot more than the industry wanted it to.

For lenders, investors, compliance teams, and fintech founders, that was not a minor footnote. That was the kind of sentence that makes someone open a spreadsheet, whisper “well, that’s not ideal,” and cancel lunch.

Why a 1980 Banking Statute Suddenly Feels Like Front-Page News

DIDMCA was passed in 1980 to help level the playing field between national banks and state-chartered banks. Under Section 521, a state-chartered, FDIC-insured bank can generally charge the rate allowed by the law of the state where the bank is located, even when lending across state lines. That is the rate-exportation principle. It is one of the quiet engines behind nationwide lending programs, especially those built through partnerships between banks and fintech companies.

But Congress also included an escape hatch. Section 525 lets a state opt out of this regime for loans “made in such State.” That phrase sounds simple until lawyers touch it. Then it becomes the legal equivalent of a family-group text that somehow turns into a 93-message argument about what “be there soon” really means.

For years, much of the industry operated as though “made in such State” pointed mainly to where the bank was located or where the bank performed core lending functions. Colorado challenged that comfort zone.

How Colorado Turned a Technical Phrase Into a National Fight

In 2023, Colorado enacted a law opting out of DIDMCA for certain consumer credit transactions, with the measure taking effect on July 1, 2024. The point was straightforward: if out-of-state, state-chartered banks were making high-rate consumer loans to Colorado residents, Colorado wanted its own rate limits to apply. Trade groups representing industry participants sued, and in 2024 the federal district court granted a preliminary injunction blocking Colorado from enforcing the law against out-of-state state banks.

Then the 10th Circuit reversed. In its November 10, 2025 panel decision, the court held that loans “made in such State” include loans in which either the lender or the borrower is located in the opt-out state. That meant Colorado could apply its rate caps to loans made by out-of-state, state-chartered banks to Colorado borrowers. The majority framed the issue as one of statutory text and state police power. The dissent saw the ruling as a direct threat to the parity Congress intended between national banks and state banks.

That disagreement is not just academic. If the borrower’s location can trigger an opt-out state’s law, then the economics of a multi-state lending program can change overnight. It becomes much harder to build one national product and call it a day. Suddenly, state maps start looking less like marketing territory and more like a minefield drawn by committee.

Why the Ruling Hit Bank Partnerships So Hard

Bank partnerships often rely on a state-chartered bank in a permissive-rate state to originate loans nationwide. The fintech handles marketing, user experience, customer acquisition, and sometimes servicing. The bank supplies the charter, compliance framework, and origination authority. Everyone involved likes scale. Everyone also likes legal certainty. The 10th Circuit panel opinion made both harder.

1. It Made Borrower Geography Central Again

If an opt-out state can impose its own rate restrictions whenever its residents are the borrowers, then one of the cleanest assumptions in interstate lending begins to crack. Product teams can no longer think only about where the bank is chartered. They have to ask where the customer sits, what the relevant state has enacted, and whether that state will try to follow Colorado’s lead.

2. It Increased the Appeal of National Bank Partnerships

Colorado’s opt-out law targeted state-chartered institutions, not national banks. That instantly made national bank relationships look more valuable. In a market where certainty is often worth as much as innovation, a federal charter can start to look less like a regulatory detail and more like premium real estate.

3. It Pushed Compliance From Back Office to Business Model

Many legal issues in financial services are expensive but manageable. This one is different because it goes to the product’s operating logic. If state-by-state rate restrictions, true-lender standards, and anti-evasion rules keep expanding, then legal structure is no longer just a compliance wrapper. It becomes the product itself.

Why This Decision Was the First Ripple, Not the Last

Even though the panel decision was later vacated for en banc review, the ripple effect had already started. Courts do not operate in a vacuum, and neither do state legislatures. Once Colorado got a favorable appellate reading of DIDMCA’s opt-out provision, lawmakers elsewhere took notice.

Oregon moved aggressively in 2026 with HB 4116, legislation aimed at restricting out-of-state lenders from charging above Oregon’s 36 percent cap on certain consumer finance loans. Rhode Island reintroduced a DIDMCA opt-out and true-lender package. New York advanced a bill targeting “predatory loan evasion practices” and tightening rules around who counts as the real lender. Wisconsin lawmakers also introduced a true-lender measure tied to a 36 percent APR framework.

That is the real significance of the 10th Circuit fight. The case is no longer just about Colorado. It is now a template, a warning, and a political talking point. To consumer advocates, it is proof that states can push back against what they view as rent-a-bank structures. To industry groups, it is proof that a fragmented, state-by-state lending regime is no longer a theoretical risk. Both sides are reading the same tea leaves. They just disagree on whether the tea is calming or on fire.

The Bigger Story: DIDMCA Is Only One Front in the Bank-Partnership Wars

If you want to understand where bank partnerships are headed, you have to see three battles running at once.

Battle One: Who Made the Loan?

This is the true-lender question. The OCC tried to simplify that question in 2020 with a rule saying a national bank made the loan if it was named as lender in the agreement or funded the loan at origination. Congress repealed that rule in 2021. Since then, the market has been left with a much messier landscape.

That uncertainty shows up in recent litigation. In California, the DFPI argued that OppFi’s program with FinWise Bank was an unlawful rent-a-bank arrangement designed to evade California’s rate caps. But in February 2026, a Los Angeles court tentatively granted summary judgment to OppFi, finding the agency had not shown that the bank was merely a dummy lender. That does not end true-lender risk everywhere, but it shows how fact-specific these disputes remain.

Battle Two: Which State’s Rate Rules Apply?

This is the DIDMCA question, and it is where the Colorado case lands with full force. If more states opt out, or if courts increasingly permit borrower-state rules to control, then interstate consumer lending by state-chartered banks becomes significantly more complicated.

Battle Three: What Happens After the Loan Is Sold?

This is where “valid-when-made” and cases like Madden continue to haunt the market. Regulators have tried to preserve certainty for assignees and secondary markets, but the broader message remains the same: courts and agencies are still sorting out how much federal rate authority survives when the structure gets more complex than a bank making a plain-vanilla loan and holding it forever. Which, to be fair, is not most of modern consumer lending.

What Consumer Advocates and Industry Critics See

Supporters of Colorado’s approach argue that bank partnerships have too often been used to route high-cost credit around state usury laws. They point to loans with eye-popping APRs, thin borrower protections, and business models that seem to treat the bank as the regulatory front door while the nonbank does much of the real work. In that view, the 10th Circuit panel opinion was a needed correction, not a crisis.

That argument is not hard to understand. The CFPB’s long-running CashCall litigation became a symbol of how regulators attack form-over-substance lending structures. Consumer advocates also argue that if states cannot enforce their own rate caps against out-of-state lending programs aimed at their residents, then those caps start looking decorative.

In other words, the criticism is not merely that some products are expensive. It is that the legal architecture itself can be used to sidestep democratically enacted state protections.

What Banks, Fintechs, and Investors See

Industry participants view the problem differently. Their argument is that DIDMCA was designed to prevent discrimination against state-chartered banks and preserve parity with national banks. If opt-out states can apply their laws to out-of-state, state-chartered institutions serving in-state borrowers, then state banks become second-class national lenders. The OCC made exactly that parity point after the 10th Circuit decision.

There is also a practical objection. National lending platforms work because they can build common underwriting, pricing, documentation, servicing, and investor expectations. If each state can increasingly impose its own rate logic, anti-evasion test, and true-lender theory, then the cost of compliance rises, product availability narrows, and smaller players may be pushed out. The likely winners in that world are the firms with the biggest legal budgets and the strongest charters. Competition does not always vanish, but it does become more expensive to maintain.

What Smart Operators Should Be Doing Right Now

First, they should stop treating charter strategy as a purely legal question. Charter type, program structure, and state rollout now sit at the center of product design.

Second, they should revisit who really controls the program. Who sets pricing? Who bears economic risk? Who owns marketing? Who has the first right to buy receivables? Who makes underwriting decisions that matter? Those questions used to live in legal memos. Now they belong in board decks.

Third, they should build state-trigger playbooks. A lender cannot wait until a state passes an opt-out bill or launches an enforcement theory to figure out whether its product still works there. That kind of delay is how one compliance issue becomes six emergency meetings and a memo titled “urgent final revised v7.”

Fourth, they should plan for multiple outcomes. The en banc 10th Circuit could revive some version of the panel’s reasoning, narrow it, or reject it. Congress could step in with the American Lending Fairness Act, which aims to restore a more uniform federal rule for out-of-state, state-chartered institutions. Or nothing could be resolved quickly, which in financial regulation is not a neutral result. Uncertainty is itself a market event.

Experiences From the Front Lines of Bank Partnerships

Across the industry, the practical experience of this DIDMCA fight has been less dramatic than a courtroom speech and more exhausting than a surprise audit. Inside bank-partnership programs, the immediate reaction is rarely ideological. It is operational. Teams start redrawing state maps. Product managers ask whether Colorado, Oregon, or the next opt-out state needs to come off the approved-state list. Compliance officers start tracing who holds the predominant economic interest in the loan. Finance teams ask whether the product still works at 36 percent APR. Nobody is speaking in grand constitutional theory at that moment. They are trying to figure out whether the current offer can still be sold on Tuesday.

For banks, especially state-chartered institutions that have built meaningful fintech channels, the experience is often one of strategic whiplash. A structure that seemed bankable under one reading of federal law suddenly looks vulnerable under another. Directors and senior executives begin asking uncomfortable but sensible questions: Are we comfortable being the visible lender in a program that regulators may treat as functionally controlled by someone else? Are our contracts aligned with our story about who really makes the loan? Are our indemnities helping us manage risk, or are they becoming evidence that someone else is carrying the economic burden and operational control?

For fintechs, the experience can feel even more immediate. Growth models built on nationwide expansion start colliding with the messy reality of fifty-state lending. A startup that once saw “compliance by bank partner” as a shortcut learns that it still needs a serious state-law strategy. Customer acquisition plans must be revised. Marketing language gets scrubbed. Servicing scripts may need changes if certain loans are no longer available in certain states. The legal team, which was once invited to meetings at the end, is now invited at the beginning. Sometimes that is progress. Sometimes it is a sign the building is already warm.

Investors and funding partners have their own version of the experience. Warehouse providers, purchasers, and diligence teams want to know whether receivables are enforceable, whether pricing is stable, and whether any state is likely to challenge the structure. A lending program can survive many things, but ambiguity around enforceability is rarely one of them. That is why even a vacated appellate opinion can still matter commercially. The opinion may no longer be binding, but its logic may already be influencing diligence questions, reserve assumptions, and valuation discounts.

Borrowers, meanwhile, experience all of this in a simpler form. They see products appear, disappear, or change price depending on where they live. Industry professionals may call that jurisdictional tailoring. Consumers may call it confusing. Both descriptions can be true.

The shared experience, then, is not just legal uncertainty. It is the sense that bank partnerships have entered a phase where structure, substance, and geography are all under heavier scrutiny at the same time. That is why the Colorado case has become a landmark even before the final answer arrives. It forced the market to confront a reality it had hoped to postpone: in modern consumer lending, the hard question is no longer whether bank partnerships will face more pressure. The hard question is which pressure arrives first.

Conclusion

The 10th Circuit’s DIDMCA decision became important the moment it suggested that borrower location could reshape interstate lending by state-chartered banks. It became even more important when legislators, regulators, trade groups, and consumer advocates began treating it as a launch point for the next round of bank-partnership battles. Yes, the panel opinion has been vacated pending en banc review. No, that does not make the aftershocks imaginary.

The larger lesson is simple: bank partnerships are no longer judged only by whether they are innovative or efficient. They are being judged by who truly controls the loan, which state gets to police the product, and whether federal parity still means what the market thought it meant. That is why this case is the first of many. It is not just about Colorado. It is about the future architecture of nationwide lending in America.

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