[00:00:03] Speaker 04:
All right, we have reassembled.

[00:00:05] Speaker 04:
The next case for argument is National Association of Industrial Bankers versus Wiser.

[00:00:11] Speaker 04:
It is Dock at 24-1293.

[00:00:14] Speaker 04:
Council, please proceed when you're ready.

[00:00:25] Speaker 02:
Good morning, Your Honors.

[00:00:26] Speaker 02:
May it please the Court, Brian Urengar on behalf of Defendants Philip Wiser and Martha Fulford.

[00:00:32] Speaker 02:
We're here today because the banks want to deny states rights given to them by Congress.

[00:00:37] Speaker 02:
Congress added an opt-out to DITA to preserve one of the state's oldest police powers, the ability to regulate interest charged to its citizens.

[00:00:45] Speaker 02:
But the banks want this court to render that right meaningless by reading into the opt-out language that just isn't there.

[00:00:51] Speaker 02:
The bank's interpretation robs the states of one of its oldest police powers.

[00:00:55] Speaker 02:
creating a race to the bottom where banks will move to states with effectively no interest rate caps so they can charge vulnerable Coloradans triple-digit interest rates, creating an absurd result where the only thing a state cannot regulate is the interest rate charged to its citizens, even though it could before DITA and still does for non-bank lenders.

[00:01:14] Speaker 02:
The opt-out's language doesn't support this result.

[00:01:17] Speaker 02:
So first I want to talk about flaws in the district court's interpretation of DITA and the opt-out.

[00:01:22] Speaker 02:
Second, I want to talk about why the bank's arguments don't save the district court's opinions.

[00:01:26] Speaker 03:
And then finally, I want to discuss some of the practical problems with the district court's rulings.

[00:01:43] Speaker 03:
Based upon Supreme Court precedent, there may be issues with that.

[00:01:45] Speaker 03:
But your challenge to that thereafter in the pleadings was that these plaintiffs may not be the right people to bring suit.

[00:01:54] Speaker 03:
It wasn't that they never actually brought a cause of action.

[00:01:58] Speaker 03:
Do you believe that their invocation of the court's equity powers and their initial complaint was sufficient to plead a cause of action?

[00:02:05] Speaker 02:
We do not, your honor.

[00:02:07] Speaker 02:
So we think that the Armstrong is clear that there's no implied private right of action in the FDIA.

[00:02:14] Speaker 02:
So no, we think that they do not have standing because they have to have the private right of action to bring this action altogether, your honor.

[00:02:22] Speaker 02:
And largely that's based on the language of 12 USC 1831D, which very clearly has a private right of action and it does not belong to the banks.

[00:02:32] Speaker 03:
It belongs to the borrowers against the banks.

[00:02:35] Speaker 03:
But doesn't that also distinguish Armstrong?

[00:02:37] Speaker 03:
Because Armstrong I believe was looking at the Medicaid Act and it had separate enforcement provisions that you argue here I think are more analogous to the FDIC as an enforcer.

[00:02:46] Speaker 03:
But this statute does provide for private cause of action and I agree explicitly it provides to

[00:02:52] Speaker 03:
the persons who are receiving the loans, but at least affords a private cause of action.

[00:02:57] Speaker 03:
Doesn't that put this maybe in different footing than Armstrong?

[00:03:01] Speaker 02:
It does not, Your Honor, because the

[00:03:03] Speaker 02:
it expresses one private right of action, it doesn't express it for the bank.

[00:03:06] Speaker 02:
So the expression of one means the exclusion of all others, and that's why it's different.

[00:03:11] Speaker 02:
And as the court alluded to, the FDIC enforces the FDIA.

[00:03:16] Speaker 02:
They have the power to sue and be sued, and they can promulgate rules, they can issue interpretive letters, and we believe they could sue the state to the extent that they were to

[00:03:27] Speaker 02:
enforce laws that were contrary to federal law.

[00:03:30] Speaker 02:
So we think, one, 1831-D includes a cause of action, but it doesn't belong to the banks.

[00:03:35] Speaker 02:
And two, the FDIC can enforce the FDIA.

[00:03:39] Speaker 04:
How does ex parte young and equitable relief end to that?

[00:03:45] Speaker 02:
So ex parte young fits into that, Your Honor.

[00:03:49] Speaker 02:
First, you have to have an implied right of action before you can assert a claim under ex parte young.

[00:03:56] Speaker 02:
This is a developing trend in the jurisprudence where after Armstrong, you see more and more courts are winding back the prior right of action.

[00:04:03] Speaker 02:
But Armstrong itself recognizes ex parte young.

[00:04:06] Speaker 02:
And in that case, the plaintiffs were suing to enjoin a state law that they believed was in violation.

[00:04:11] Speaker 02:
And the court didn't save that claim based on ex parte young.

[00:04:15] Speaker 02:
So I think the appropriate reading is ex parte young allows for equitable claims.

[00:04:20] Speaker 02:
It's an exception to sovereign immunity under certain circumstances, but Armstrong is clear.

[00:04:25] Speaker 02:
The statute still has to have an implied or explicit right of action before you can sue under it.

[00:04:32] Speaker 02:
And they don't have that here.

[00:04:37] Speaker 02:
So turning to my first point, I wanted to talk about the district court's interpretation and how it's not actually supported by the language used in the opt out.

[00:04:43] Speaker 02:
The court noted the challenging structure of the opt-out, but nonetheless applied the plain meaning without reconciling meaningful variations between the preemption provision itself, which has a clear focus on the bank's location, versus the opt-out, which is a clear focus on where the loan itself is made.

[00:05:00] Speaker 01:
But Title 12 is pretty clear on that it's lender-focused.

[00:05:05] Speaker 01:
I mean, it seems that we can just discern a lender-focused approach here by looking at the statutory scheme.

[00:05:12] Speaker 02:
I don't think you can, your honor.

[00:05:13] Speaker 02:
So I think certainly the statute does say that banks make loans in some circumstances.

[00:05:19] Speaker 02:
It also frequently uses the word made, which again, that's what the opt out uses.

[00:05:23] Speaker 02:
It talks about where the loan itself is made.

[00:05:25] Speaker 02:
I'd also point out that in title 12, it mentions how banks can make a contract, but at the end of the day, I don't think anyone would dispute that a bank cannot make a contract without another party.

[00:05:36] Speaker 02:
They can't make it by themselves.

[00:05:37] Speaker 02:
So I think the reason why the logic breaks down in this context is that a loan isn't just a widget that a bank makes and they put it on a shelf and then some borrower comes along and buys it.

[00:05:49] Speaker 02:
The loan itself never comes into existence until the borrower utters the words of acceptance.

[00:05:55] Speaker 02:
And so under the modern rule, when there's an interstate contract and one party's in one state and one party's in the other, it's made in both states.

[00:06:02] Speaker 02:
Under the traditional rule,

[00:06:03] Speaker 02:
where the words of acceptance are uttered is where the actual... Great.

[00:06:07] Speaker 01:
I understand your argument and I understand your argument.

[00:06:11] Speaker 01:
My question was more about your reliance on meaningful variation and how to receive your argument in light of the statutory scheme itself not seeming very variable, seems quite consistent.

[00:06:23] Speaker 01:
That was what I was trying to ask.

[00:06:26] Speaker 02:
I think the meaningful variation canon comes into play, Your Honor, specifically when you're looking at DITA itself.

[00:06:32] Speaker 02:
So you have section 521 where it had a very clear bank focus, where the interest rate is based on where the bank is located, and then section 525.

[00:06:40] Speaker 02:
I think the canon of meaningful variation is most valuable when you're looking at a specific law that was passed rather than reaching deep into a corpus juris that could be promulgated over 50 years of

[00:06:51] Speaker 02:
of acts of Congress.

[00:06:54] Speaker 02:
But when you look at DITA as it was passed in 1980, it went from a very clear bank focus to a focus on where the loan itself is made.

[00:07:01] Speaker 02:
And that's because the courts would consider the loan being made both where the borrower is and where the lender is, because that's consistent with federal jurisprudence.

[00:07:10] Speaker 03:
So I'd say your theory has shifted a little bit on that now to this two-state theory.

[00:07:14] Speaker 03:
So how do you respond to that?

[00:07:16] Speaker 02:
I don't think that's accurate, Your Honor.

[00:07:17] Speaker 02:
Obviously, the state was being sued in a preliminary injunction where the banks were suing us saying that the borrower is irrelevant.

[00:07:25] Speaker 02:
Obviously, Colorado has a strong interest in protecting its borrowers and its state, but I think it's entirely consistent that despite having a focus on the borrower, we've never said that a loan made by a bank located in Colorado wasn't also made in Colorado.

[00:07:41] Speaker 02:
It's consistent with the territorial application of the UCCC.

[00:07:44] Speaker 02:
Moreover, I think the

[00:07:45] Speaker 02:
If there's any doubt whether or not we were focusing on both where the borrower is and the lender is, we made that point clear in the actual preliminary injunction hearing.

[00:07:54] Speaker 02:
It's throughout the record and the judge recognized that in his actual order.

[00:07:58] Speaker 03:
Where is the borrower located?

[00:08:00] Speaker 03:
Can you help me understand Colorado's theory?

[00:08:02] Speaker 03:
Does it require someone to be a Colorado residence or would it apply to someone who's merely passing through Colorado but may stop to sign loan paperwork?

[00:08:11] Speaker 03:
How's the bank to know whether or not the person is in Colorado, if that's meaningful under the interpretation of DITA?

[00:08:18] Speaker 02:
So there's a few questions there I want to unpack, Your Honor.

[00:08:21] Speaker 02:
So the first one is, under state law, how would Colorado view the borrower just passing through?

[00:08:26] Speaker 02:
So I think the territorial application of Colorado's UCCC is pretty clear.

[00:08:30] Speaker 02:
You have to be a resident of the state who's physically present in the state of Colorado at the time the loan is made.

[00:08:36] Speaker 02:
So if you're a Colorado resident and you're in Utah when you make that loan,

[00:08:40] Speaker 02:
UCCC, Colorado UCCC doesn't apply.

[00:08:43] Speaker 02:
So that's Colorado's law is arguably narrower than the interpretation of the opt out.

[00:08:49] Speaker 02:
Um, with respect to where a borrower is for the purposes of the opt out, they are, wherever they are physically present at the time they accept it, except the loan is where the loan itself is made.

[00:09:02] Speaker 02:
Um, and to your third question, your honor is how, how are the banks going to actually facilitate this?

[00:09:07] Speaker 02:
Well, first of all, they can just make it part of the contract and they frequently do make that part of the contract.

[00:09:12] Speaker 02:
So if you look at some of the contracts that they proposed in the appellate records around pages 286 to 320, and there's a handful of them, they frequently reference which residents their loans are available to.

[00:09:26] Speaker 02:
There's even one instance for the Nordstrom credit card where they require individuals living in U.S.

[00:09:30] Speaker 02:
territory to apply in person in one of the 50 states because they want to do it remotely.

[00:09:35] Speaker 02:
One of the applications, which I believe is at page 286, talks about if you're submitting this application via your phone, your mobile phone, you can send to them using your mobile phone to identify you and prevent fraud.

[00:09:48] Speaker 02:
So obviously they have technical ways to do it on top of contractual provisions where

[00:09:52] Speaker 02:
You can just ask them and they have to tell you.

[00:09:55] Speaker 02:
And if they don't, that's a factual issue that can be resolved by the courts later in an action.

[00:10:00] Speaker 02:
But they certainly can do it.

[00:10:01] Speaker 02:
There's sophisticated entities that do this sort of thing all the time, your honor.

[00:10:07] Speaker 02:
Part of the court's analysis hung on what it said was the common parlance.

[00:10:14] Speaker 02:
Nobody thinks of themselves as making a loan when they borrow money from a family member.

[00:10:20] Speaker 02:
But that's not actually what DITA hinges on.

[00:10:22] Speaker 02:
DITA hinges on where the loan is made.

[00:10:24] Speaker 02:
So a more precise rhetorical question would be to ask, does TAB Bank, a Utah bank, make loans in the state of Colorado?

[00:10:32] Speaker 02:
And the natural follow-up to that question isn't, where does the bank performance three non-ministerial functions?

[00:10:38] Speaker 02:
The natural follow-up to that question is,

[00:10:41] Speaker 02:
Well, who are they lending to and where are they located?

[00:10:43] Speaker 02:
If TabBank is in Utah and they are lending to a resident in Colorado, I think in common parlance, everyone would say, yes, they are making loans in Colorado and that specific loan itself is made in the state of Colorado.

[00:10:57] Speaker 02:
The court also pointed out that Congress could have

[00:10:59] Speaker 02:
drafted a borrower focus if it wanted to, but that ignores the fact that a loan doesn't exist without two parties.

[00:11:06] Speaker 02:
And so the use of the word loan, we pause it, does actually have both a focus on where the bank is and where the borrower is.

[00:11:17] Speaker 02:
With regards to the bank's arguments, for the most part, they rely on legislative history from various bills that don't actually apply to DITA itself.

[00:11:25] Speaker 02:
And when it comes to the legislative history, they cite for data, they're actually mostly citing to legislative history that focuses on the preemption provision, which clearly had a focus on both the interest, the federal discount rate plus 1% as well as the ability to export interest rates.

[00:11:42] Speaker 02:
However, if you look at the legislative history that Colorado cited to, which we think we can resolve this on the plain language, but if you look at legislative history with respect to the opt out,

[00:11:52] Speaker 02:
there was a focus on the ability of states to reassert their usury laws if they decide to reject the principles of DITA, which is exactly what Colorado has done here.

[00:12:05] Speaker 01:
Could you better explain or at least better explain to me your status quo argument?

[00:12:10] Speaker 01:
I wasn't really sure what to do with that.

[00:12:13] Speaker 02:
Yes, Your Honor.

[00:12:14] Speaker 02:
So essentially what we're saying there is that

[00:12:17] Speaker 02:
You have the DITA and the National Bank Act.

[00:12:20] Speaker 02:
So for federally chartered banks, they can preempt state laws based on the National Bank Act.

[00:12:26] Speaker 02:
DITA gave the same power to state chartered banks.

[00:12:30] Speaker 02:
If you don't have DITA or the National Bank Act, the status quo is you have to rely or you have to comply with the laws of the state.

[00:12:38] Speaker 02:
And it turns on a question of state law.

[00:12:40] Speaker 02:
Some states like the laws like Colorado here,

[00:12:43] Speaker 02:
have conflict of laws that say, if you're going to lend to a resident who's in Colorado, our laws apply.

[00:12:48] Speaker 02:
And when that's been challenged in the past, those have been uniformly held constitutional.

[00:12:54] Speaker 02:
The only reason why the banks are in a different situation here is because they have a federal statute preempting state law.

[00:13:00] Speaker 02:
So naturally, if Colorado is opting out of that federal law, you should return us to that state where if you don't have data, you must comply with state law.

[00:13:07] Speaker 02:
And that's exactly what Colorado did here.

[00:13:09] Speaker 02:
But the banks want to still avail themselves to the ability to export interest rates

[00:13:13] Speaker 02:
which is a power they seem to concede they did not have before DITA, because they've mentioned how the interstate loan market didn't exist until many years following DITA.

[00:13:24] Speaker 02:
And I see that I'm running low on time.

[00:13:25] Speaker 02:
I'd like to reserve the remaining time for rebuttal if there's no more questions.

[00:13:29] Speaker 02:
Thank you, Your Honors.

[00:13:32] Speaker 00:
Good morning, Your Honors, and may it please the court, David Gossett for the plaintiff's appellees.

[00:13:38] Speaker 00:
As the district court correctly held, when Colorado opted out of Didmica, it obtained the right to limit the interest rates that the banks it charters may charge, but it did not obtain the right to limit the rates that out-of-state banks may charge when lending to Colorado borrowers.

[00:13:55] Speaker 00:
That's clear from the text of Didmica, from the statute's history, from the use of made in other federal banking statutes, relevant case law, and the regulatory interpretations of at least three different

[00:14:08] Speaker 00:
regulatory agencies.

[00:14:10] Speaker 01:
How do you respond to Colorado's meaningful variation argument if we're understanding it to just be looking at 521 and 525?

[00:14:19] Speaker 00:
Several ways, Your Honor.

[00:14:22] Speaker 00:
For starters, I think that

[00:14:26] Speaker 00:
The canon of meaningful variation is defeasible, and in this case, I think the bottom line is that it is defeased.

[00:14:33] Speaker 00:
There is no distinction that the court needs to draw between the word made in Section 525 and the word located in Section 521.

[00:14:41] Speaker 00:
That comes from looking at the way the statutes were constructed, it comes from the purposes of the statute, and it comes from the way the word made is used in Section 525, which is referring to the period of time during which loans would be subject to the

[00:15:04] Speaker 00:
521 rule.

[00:15:06] Speaker 00:
So I think that an attempt to differentiate between made and located is a fool's errand in this instance.

[00:15:14] Speaker 00:
That said, I think that both words essentially mean the same thing in this context.

[00:15:26] Speaker 00:
And let's focus on made, because that's obviously the important one.

[00:15:31] Speaker 00:
for the purposes of Section 525.

[00:15:34] Speaker 00:
And the bottom line is that banks make loans.

[00:15:37] Speaker 00:
If I were to ask my colleague, Ms.

[00:15:41] Speaker 00:
Brandris, if she took out a loan today from a bank officer, Mr. Swift, if I asked Ms.

[00:15:48] Speaker 00:
Brandris, did you make a loan today, she'd say, no, I got a loan.

[00:15:51] Speaker 00:
If I asked Mr. Swift if he made a loan today, he would say he made a loan.

[00:15:55] Speaker 00:
And that's just common English.

[00:15:59] Speaker 00:
It's the way the word is used, as Judge Domenico recognized.

[00:16:02] Speaker 00:
It's also the way the word made is used throughout Title XII of the banking laws.

[00:16:10] Speaker 00:
And it's the way the word made is used in the Gramm-Leach-Bliley Act, which the Eighth Circuit and the Jessup case interpreted similarly to be about where the bank is making the loan.

[00:16:21] Speaker 04:
Why is it not a fair interpretation of that word to say completed or finished?

[00:16:29] Speaker 04:
The loan is made.

[00:16:31] Speaker 04:
Oh, we have an existing loan then.

[00:16:34] Speaker 04:
And from that, that it's both the borrower and the lender who make the loan.

[00:16:43] Speaker 00:
The temporal nature of the loan goes to the fact that this is an effective day provision, but I'm not sure, Your Honor, what it would mean in the context how that would affect where the loan was made.

[00:16:56] Speaker 00:
That goes to this notion that the state has that the loan is made in two separate places, both where it is made by the bank and where it's received by the lender.

[00:17:06] Speaker 00:
as just Federico's questions led to, it's very hard to figure out where a loan would be made in that circumstance.

[00:17:14] Speaker 00:
Because borrowers move, what happens when the borrower who has a credit card that they got issued in Colorado purchases something in Utah, what rate applies to that?

[00:17:28] Speaker 00:
The bottom line is that throughout all of these cases and all of these

[00:17:35] Speaker 00:
of regular interpretations, what we go back to is the focus on where the bank was that is making the loan.

[00:17:42] Speaker 00:
My friend on the other side talked about the non-ministerial functions test.

[00:17:46] Speaker 00:
And I think it's important to understand that that's only really going to essentially edge cases.

[00:17:53] Speaker 00:
The bottom line rule, and this is what the Supreme Court held in the Marquette decision, is that when the National Bank of Omaha is making a loan, it's making that loan in

[00:18:06] Speaker 00:
Omaha in Nebraska, even if it's lending to a borrower in Minnesota.

[00:18:12] Speaker 04:
You slide back and forth between make and made throughout the brief and you're doing it now.

[00:18:17] Speaker 04:
It's not the same word.

[00:18:19] Speaker 04:
The statute's written the way the statute's written.

[00:18:26] Speaker 00:
Okay, I will focus on the word made.

[00:18:28] Speaker 00:
This is a separate point, and this is, I think, where it's important to focus on the fact that Section 525 is labeled effective date, and it's talking about that 521 only applies with respects loans made in any state during the period between

[00:18:48] Speaker 00:
beginning on April 1, 1980, and ending on the date when the state opts out.

[00:18:53] Speaker 00:
So that made in that context, the past participle there, has to do with the fact that the opt-out still applies to a loan that was made before the state opts out.

[00:19:06] Speaker 00:
That's what Congress was trying to ensure by using the past tense here, is that if

[00:19:14] Speaker 00:
a state opt out and the opt out applies to the kind of loan, which we can return to in a second.

[00:19:22] Speaker 00:
A loan that was issued at a higher interest rate before the opt-out is still valid.

[00:19:29] Speaker 00:
And the rate for that loan can still be charged because the opt-out hadn't yet happened.

[00:19:37] Speaker 00:
So that's why they use the past tense.

[00:19:39] Speaker 00:
And it's why we jump back and forth between made and make.

[00:19:42] Speaker 00:
It's also the litany of maids that we point to in Title XII and the Glamleach-Bliley Act

[00:19:49] Speaker 00:
There were both, but to be clear, the Eighth Circuit's decision in Jessup involves the word made as well.

[00:19:57] Speaker 00:
Can I take a step back, though, and focus the Court on the first sentence of Section 521, which I think is the most important thing here, which is that

[00:20:09] Speaker 00:
The opt-out is in order to prevent discrimination against state chartered insured depository institutions.

[00:20:21] Speaker 00:
The state's argument here is all based on the theory that what Congress was doing in Didmica was consumer protection.

[00:20:30] Speaker 00:
It was not.

[00:20:32] Speaker 00:
Congress was focused on the dichotomy between the rates that state chartered banks could lend at and national banks could lend at.

[00:20:41] Speaker 00:
That's what they were focused on.

[00:20:42] Speaker 00:
And they said, we're going to get rid of that dichotomy.

[00:20:46] Speaker 00:
We're going to let an Arkansas state bank lend at the same rate as an Arkansas national bank.

[00:20:53] Speaker 00:
But because that Arkansas state bank is a creature of the Arkansas government, we're going to let them, if they want to, reassert control over that bank.

[00:21:03] Speaker 03:
How does that reading square with the history that was presented to us in the briefs about

[00:21:09] Speaker 03:
You know, the state chartered banks becoming or having problems competing in the marketplace because the federal rate at the time before DIDMCA was passed, it started to go up so high during a high inflationary environment.

[00:21:25] Speaker 03:
In other words, if it were true that Congress only wanted to allow states to regulate state chartered banks, I mean, no state would ever opt out because the state chartered banks would always have trouble competing in the marketplace, right?

[00:21:39] Speaker 00:
Wrong, but for two reasons.

[00:21:43] Speaker 00:
The first is that the time when DIDMCA, everyone calls it different things.

[00:21:53] Speaker 00:
I think the current standard is DIDMCA, but it doesn't matter.

[00:21:56] Speaker 00:
At the time when Didmica was enacted, the time when the Brock Act was enacted, the time when the Bar's relief were enacted, these were a moment in time when the federal reserve rate was very high.

[00:22:08] Speaker 00:
And so therefore, banks couldn't lend successfully at any rate in a state like Arkansas, which had a 10% cap.

[00:22:16] Speaker 00:
So it really was about allowing Arkansas banks to lend in Arkansas.

[00:22:22] Speaker 00:
And importantly, those earlier two statutes both raised the limit on national banks too.

[00:22:28] Speaker 00:
They raised the limit on national banks to 5% over the discount rate, and then in parallel raised the limit on state-chartered banks to 5% over.

[00:22:37] Speaker 00:
But the second response to your honor's question, Judge Federico, is that in the initial aftermath of Didmica, seven states opted out, and six states, Puerto Rico also, opted back in.

[00:22:52] Speaker 00:
because in the end, this law doesn't do what the state thinks it does.

[00:22:58] Speaker 00:
It allows a state to regulate its banks.

[00:23:01] Speaker 00:
It allows the state of Colorado to say that although a Colorado national bank can export

[00:23:07] Speaker 00:
the Colorado interest rate into Arkansas, which still has a lower interest rate cap, a Colorado state chartered bank cannot.

[00:23:15] Speaker 00:
So they are insisting that the Colorado state chartered bank has to follow that rule, whether the Colorado caps in the state, outside of the state.

[00:23:25] Speaker 00:
But they're not addressing, and they cannot address, whether the Utah state bank

[00:23:33] Speaker 00:
can lend at Utah's rates because that's Utah's right.

[00:23:38] Speaker 00:
It's not Colorado's right to regulate that.

[00:23:40] Speaker 01:
What is it about the statutory tax that supports what you just said?

[00:23:43] Speaker 01:
That the focus is not on the Utah, controlling what the Utah banks can do.

[00:23:57] Speaker 00:
I would focus on the discrimination against state chartered insured institutions and market.

[00:24:04] Speaker 01:
Okay, so the purpose of DIDMACA as not being focused on consumer protection is your position?

[00:24:14] Speaker 01:
That's how we should interpret the statute and the text and is that anything else?

[00:24:20] Speaker 00:
Well, I think that is certainly true.

[00:24:21] Speaker 00:
I also think it is true that the use of made in throughout the code is parallel.

[00:24:29] Speaker 00:
The fact that over the course of the years since then, the government regulatory agencies have fairly consistently until the

[00:24:37] Speaker 00:
until an earlier brief in this case, so held as well.

[00:24:41] Speaker 01:
That's actually, I'm wondering what your position is on what we should do with the FDIC's sort of conflicting statements on, you know, it seems that there may be a statement in the 2020 rule that seems to support Colorado's interpretation.

[00:24:55] Speaker 01:
Subsequent statements could be read in support of your position.

[00:24:59] Speaker 01:
What do we do with all that?

[00:25:02] Speaker 00:
Your Honor, I had a discussion with Judge Domenico about sort of deference to these rules, because our argument there was shortly before Oprah Bright was decided.

[00:25:14] Speaker 00:
And what I said to Judge Domenico is none of these are the kinds of rules that would get any deference, kinds of statements that would get deference, even under Chevron, certainly not post that.

[00:25:26] Speaker 00:
That said,

[00:25:28] Speaker 00:
Going back to principles from Skidmore and other cases, earlier in time statements that are issued similar to the point when a rule is issued are traditional, or when a statute was made, traditionally get more deference than later ones.

[00:25:46] Speaker 00:
And so I would look back to the 88 in general counsel's opinion, the 92.

[00:25:52] Speaker 00:
The interpretive letter?

[00:25:54] Speaker 01:
The interpretive letter, is that what you're...

[00:25:56] Speaker 00:
Yeah, the interpretive letter and the general counsel opinion 11, which is, I guess that's 1998, which was formally adopted by the board of the

[00:26:13] Speaker 00:
of the FDIC.

[00:26:15] Speaker 00:
I also think it's important to note that the 2020 rule was not about this.

[00:26:22] Speaker 00:
The 2020 rule was the so-called Madden Fixed Rule.

[00:26:25] Speaker 00:
It had to do with the sale of

[00:26:29] Speaker 00:
of loans by a bank to someone else.

[00:26:31] Speaker 00:
And there is some loose language in there that certainly the state can point to, but I don't think that was never the focus of that rule, whereas many of the earlier ones were very directly focused on Didmica and the interpretation of Didmica.

[00:26:45] Speaker 00:
That said, I think this case, you don't need to go there.

[00:26:48] Speaker 00:
I don't think you need to

[00:26:52] Speaker 00:
work through the series of FDIC, OCC, OTS statements on this to rule in our favor, nor do I think they would necessarily even help the state.

[00:27:03] Speaker 00:
So I do think it's important to return to the basic principle.

[00:27:09] Speaker 03:
Counsel, can I return to our discussion about the first sentence in Section 521?

[00:27:14] Speaker 03:
And I know you say that my question was wrong, and perhaps you're correct that I'm wrong.

[00:27:20] Speaker 03:
But I'd like to at least probe a little more.

[00:27:22] Speaker 03:
You seem to be putting a lot of weight on the in order to prevent discrimination against, but who in that context of the statute is doing the discriminating?

[00:27:31] Speaker 03:
If I'm supposed to read that language to say that this is the whole purpose of DIDMCA and 521 and 525 should be read together to allow states to return to their traditional police power over usury laws, if that's all true, then who would be doing the discrimination against state chartered banks that Congress was trying to protect?

[00:27:55] Speaker 03:
What does that mean, prevent discrimination?

[00:27:57] Speaker 00:
I don't think it's meant to imply a discrimination in the sense of an affirmative action by a person.

[00:28:04] Speaker 00:
I think what it means is in order to prevent state chartered banks from being able to lend in the same way that nationally chartered banks can lend.

[00:28:14] Speaker 00:
That's what it means.

[00:28:15] Speaker 00:
It's that nationally chartered banks can lend at a certain rate and state chartered banks cannot.

[00:28:19] Speaker 00:
I see my time is up.

[00:28:21] Speaker 00:
May I ask one last sentence on that, which is that it's important to remember on this, the consumer protection focus that the state wants to have here, that the national banks

[00:28:32] Speaker 00:
will still and can still lend into Colorado at whatever rates are allowed in their home states despite the state's opt-out.

[00:28:40] Speaker 00:
So the opt-out really does not have any of the effects that the state is trying to have because all it really is going to do is force state banks to convert to national charters.

[00:28:51] Speaker 00:
Thank you, Your Honors.

[00:28:53] Speaker 02:
May it please the court.

[00:28:54] Speaker 02:
So one of the statements my friend just made was made and located mean essentially the same thing, but only it's only a real big problem in edge cases.

[00:29:01] Speaker 02:
First of all, made and located are two different words.

[00:29:04] Speaker 02:
If Congress wanted to use located, they would have put located in the opt out.

[00:29:07] Speaker 02:
Second, the problem with the edge case actually shows the absurdity of their position in the edge cases.

[00:29:13] Speaker 02:
Um, specifically if all three non-ministerial functions are done in different States.

[00:29:18] Speaker 02:
There could be a situation where the loan is made under the location test in a fourth state where none of the ministerial functions have actually happened.

[00:29:25] Speaker 02:
That is an absurd result that is not contemplated by section 525.

[00:29:30] Speaker 02:
With respect to Jessup, Jessup was a case interpreting a different statute in the National Bank Act.

[00:29:36] Speaker 02:
applying Chevron deference to an OCC letter, a different regulator that regulates national banks, that's no longer even available.

[00:29:42] Speaker 02:
So before Loper-Brite, it wasn't instructive or should not get deference in this case.

[00:29:46] Speaker 02:
After Loper-Brite, there's essentially no value in it.

[00:29:50] Speaker 02:
Mr. Gossett is also dissecting the opt-out clause to focus only on the second part where it talks about accept loans made on this date.

[00:29:59] Speaker 02:
It's true that that part talks about specifically what time period of loans an opt-out is effective for, but the operative part of the opt-out is right above the part where he was quoting where it says, which states explicitly and by its terms that such state does not want this section to apply with respect to loans made in such state.

[00:30:18] Speaker 02:
That is the operative language rather than

[00:30:21] Speaker 02:
the language that they're relying on to say that it's purely about the effective date.

[00:30:25] Speaker 02:
Finally, Mr. Gossett talked about how Congress's intent wasn't to allow Colorado to tell a Utah bank what to do.

[00:30:33] Speaker 02:
If a Utah bank wants to lend to a Kansas resident, that's fine.

[00:30:38] Speaker 02:
Colorado doesn't care.

[00:30:39] Speaker 02:
What Colorado cares about is a Utah bank coming into Colorado and lending to a Colorado borrower at usurious rates.

[00:30:46] Speaker 02:
That's not supported by the opt-out, and that's why this court should reverse

[00:30:51] Speaker 02:
The district court.

[00:30:52] Speaker 02:
Great.

[00:30:52] Speaker 03:
Can I ask one more?

[00:30:54] Speaker 03:
Where in the statute can we find any language that supports that part of the purpose of Congress in passing DIDMCA was consumer protection of state residents?

[00:31:05] Speaker 02:
Well, I think, Your Honor, this is talking about usury laws.

[00:31:08] Speaker 02:
And if they didn't care about consumer protection, there would be no opt out.

[00:31:11] Speaker 02:
If it was all national parity, it would just be 521 with no 525.

[00:31:15] Speaker 02:
The fact that they had 525 was a nod to the fact that the states have always had this police power.

[00:31:19] Speaker 02:
And they should be able to have it again if they want to take it back.

[00:31:22] Speaker 03:
So Mr. Gossett's argument about the introductory language of 521A about the preventing discrimination against state charter insured depository institutions, you don't think that is directly linked to the purpose under 525?

[00:31:40] Speaker 03:
In fact, I'm hearing you say you find those purposes to be different.

[00:31:44] Speaker 02:
The purpose of that introductory clause is why they have the preemption provision.

[00:31:48] Speaker 02:
The reason they had the opt-out provision is to allow the states to assert their traditional police powers over usury.

[00:31:55] Speaker 02:
So they have different purposes.

[00:31:58] Speaker 04:
Thank you, Your Honor.

[00:32:00] Speaker 04:
Thank you, Counsel, for your arguments.

[00:32:02] Speaker 04:
The case is submitted.

[00:32:04] Speaker 04:
Counsel are excused.

[00:32:05] Speaker 04:
The court will stand in recess until 8.30 tomorrow morning.