The American Financial Services Association (AFSA) has announced its opposition to Rhode Island House Bill 6055, which seeks to have the state opt out of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). This announcement was made on the association’s website.
Rhode Island House Bill 6055 aims to prevent out-of-state lenders from bypassing Rhode Island’s interest rate limits by opting out of DIDMCA. According to LegiScan, the bill is designed to “prevent evasion of statutory interest rate limits and lending rules for loans made in RI.”
The Depository Institutions Deregulation and Monetary Control Act of 1980 was enacted to provide competitive equality between national and state-chartered banks by allowing state-chartered, federally insured banks to export interest rates permitted in their home states. Section 521 of DIDMCA grants this authority, aligning their capabilities with those of national banks. Ballard Spahr LLP notes that this provision has been instrumental in enabling state-chartered banks to offer competitive credit products nationwide.
The AFSA comprises a diverse membership, including entities that utilize bank partnership models and those operating state-chartered, federally insured banks. In their testimony, AFSA emphasized that while some members engage in bank partnerships, the majority own and oversee their own state-chartered, federally insured banks. This distinction highlights the organization’s vested interest in maintaining DIDMCA provisions to support its predominant membership base.
According to its website, the AFSA, founded in 1916, is the national trade association for the consumer credit industry. Its membership includes over 450 companies such as consumer and commercial finance companies, vehicle finance/leasing companies, mortgage lenders, credit card issuers, and industry suppliers.
