MCOA Should Be a Congressional Priority
AFSA today sent a request to Capitol Hill encouraging the reintroduction of the “Modernizing Credit Opportunities Act” (MCOA), which has been introduced in previous sessions but not in the current 119th Congress. This legislation would establish uniform federal standards for true lender determinations, while preserving the interconnected framework of federal banking law and providing a level playing field for the dual banking system.
The “Modernizing Credit Opportunities Act” would address ambiguities in existing law and provide the comprehensive federal framework needed to restore uniform national standards for both true lender determinations and valid when made protections. After Congress’ passage of the repeal of the Office of the Comptroller of the Currency’s True Lender Rule in 2021, there is no federal framework to determine true lender status in arrangements between federally insured depository institutions and financial technology (fintech) companies.
The MCOA establishes that federally insured depository institutions are true lenders when they are the party to which debt is initially owed according to loan terms, regardless of subsequent assignments or third-party service relationships. The legislation would apply uniform standards across all federally insured institutions – national banks, state banks, and federal savings associations – ensuring competitive equality while clarifying that service provider geographic location does not affect institutional location determinations.
Congress should act swiftly to re-introduce and enact the MCOA. Doing so will establish uniform federal true lender standards across all federally insured institutions, preserve valid when made protections through clear origination standards, preempt conflicting state laws undermining federal banking authority and competitive equality, and provide legal certainty for beneficial bank-fintech partnerships. Federal true lender legislation is essential for maintaining stability, innovation, and competitive dynamics that have made U.S. financial markets the strongest globally.
June 12th, 2025
