18 Democratic AGs Urge Congress to Reject H.R. 7866 on Interest-Rate Laws
Eighteen Democratic AGs oppose H.R. 7866, defending states' interest-rate laws.
Why it matters: This conflict affects the balance of regulatory power between states and the federal government, with implications for banks, borrowers, and legal advisors nationwide.
- On November 9, 2026, 18 Democratic attorneys general led by Oregon AG Dan Rayfield sent a letter opposing H.R. 7866.
- The bill seeks to restrict states' opt-out rights under federal law to only loans from their own state-chartered banks, not out-of-state banks.
- AGs warn that H.R. 7866 would erode state usury laws and enable predatory high-interest lending.
- Proponents, including Rep. Warren Davidson, argue the bill ensures loan-shopping freedom and parity among banks across states.
On November 9, 2026, Oregon Attorney General Dan Rayfield led 17 other Democratic attorneys general in urging Congress to reject H.R. 7866, known as the American Lending Fairness Act of 2026. Their letter opposes the bill's effort to limit states' ability to opt out of federal interest-rate preemption only for loans made by their own state-chartered institutions.
The underlying federal law, the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), allows state-chartered banks to charge interest rates permitted by their home states to borrowers nationwide. However, it also permits states to enforce their usury laws on loans within their borders by opting out of this preemption.
H.R. 7866 would clarify that this opt-out can apply only to loans made by in-state state-chartered banks, excluding out-of-state lenders from state-level interest-rate restrictions. This change has raised concerns among the AG coalition that it would undermine consumer protections and open the door for predatory lenders charging excessively high rates.
California Attorney General Rob Bonta stated, "States play a crucial role in consumer financial protection," emphasizing the importance of maintaining state laws against predatory lending.
Oregon AG Dan Rayfield added, "Too often, we’ve seen working families buried in debt from lenders charging triple-digit interest," stressing the need to uphold state power to cap such rates.
Conversely, supporters like Representative Warren Davidson (R-OH) advocate that the bill ensures borrowers' freedom to shop for loans regardless of lender location and aligns the treatment of state-chartered and national banks. Davidson said, "My American Lending Fairness Act protects that freedom by putting state-chartered banks and credit unions on equal footing with the largest national banks."
Since its introduction on March 9, 2026, and passage through the House Financial Services Committee on September 16, H.R. 7866 has garnered bipartisan support with seven cosponsors. However, the strong opposition from Democratic attorneys general highlights ongoing tensions about the federal-state regulatory balance that banks and legal professionals must navigate.
By the numbers:
- 18 — number of Democratic state attorneys general opposing H.R. 7866
- 7 — bipartisan cosponsors of H.R. 7866
- March 9, 2026 — date H.R. 7866 was introduced
- November 9, 2026 — date attorneys general sent their opposition letter
Yes, but: H.R. 7866 proponents argue the bill prevents regulatory inconsistencies and empowers borrower choice across state lines, highlighting tension between uniformity and state autonomy.
What's next: Congress will consider the attorneys general's letter as it debates H.R. 7866, with potential hearings or amendments before a full House vote.