If BankWest were not attempting to exercise the higher interest rate authority Congress has given it, Georgia’s law would not apply regardless of whether Advance America received half, three-fourths, nine-tenths, or all of the loan-generated revenues
If Georgia can decide that lending at charter-state interest rates is prohibited where the in-state agent has the predominant economic interest in the loan-generated revenue – that «any loan» in the federal statute does not mean all loans – it can decide that lending is prohibited where the in-state agent has an interest in one-fourth of the loan-generated proceeds, or in one-tenth of them, or where the in-state agent has any interest in them at all. Under the majority’s «quite narrow» view of the preemptive force of § 27(a), Georgia could simply declare that, under its own definition of the federal statutory terms, any in-state agent of an out-of-state bank is the de facto lender, not the bank. The majority embraces that position. 7
But that prohibition would have to be interest-rate neutral, which is to say that Georgia’s regulation of agents may not be keyed to a bank’s exercise of its § 27(a) interest-rate authority
None of this is to say that Georgia may not reasonably regulate in-state agents of out-of-state banks, so long as it does so on the same terms that it regulates agents of in-state banks. For example, if Georgia wants to forbid banks from using agents who have been convicted of felonies, nothing in § 27(a) would prevent it from doing so. Georgia may not forbid an out-of-state bank charging § 27(a) protected rates from using any arrangement payday loans in Hannibal OH that it permits a bank not charging those rates to use. More specifically, Georgia may not forbid, restrict, or condition the use of agents generally, or particular categories of agents, as a way of preventing an out-of-state bank from using those agents to exercise its federal statutory right to charge higher interest rates.
Yet that is precisely what Georgia has done. Georgia does not generally forbid the use of agents by banks when the agents have a «predominant economic interest» in loan-generated revenue. It permits banks to use agents regardless of how the economic interests are divvied up by them, so long as they do not charge the higher interest rates that § 27(a) permits. Georgia does not care how much of the revenue an agent receives so long as the agent is not used in the exercise of an out-of-state bank’s federally protected right to charge higher interest rates than state law allows. Only because BankWest’s arrangement with Advance America serves to further its federally granted § 27(a) authority does Georgia want to «regulate» that relationship. It wants to «regulate» principal-agent relationships used to effectuate § 27(a) rights in the same way that the American Temperance League wanted to «regulate» alcohol.
Don’t get me wrong. The fact that § 27(a) preempts the Georgia Act’s attempt to restrict an out-of-state bank’s ability to export interest rates does not mean that any transaction where an out-of-state bank associates with a non-bank agent in Georgia is protected, even if the relationship is clearly a sham. If, under federal law, a transaction is not actually a loan from an out-of-state bank within the meaning of § 27(a), then the bank does not have the right to export its charter state’s interest rate under § 27(a). That is, however, an issue that must be answered under federal law, not under state law. Georgia has not argued that the loans involved in this case are shams under federal law, but instead has attempted to use state law to redefine federal statutory terms, which is something it may not do.