Bankwest, Inc. v. Thurbert E. Baker

This case concerns payday loans, which are small loans with interest rates averaging 400-500% APR due on the next payday. This appeal presents the question of whether the State of Georgia may regulate a narrow segment of agency agreements between in-state payday stores and out-of-state banks or whether the Georgia Act in issue is preempted by § 27(a) of the Federal Deposit Insurance Act (“FDIA”), 12 U.S.C. § 1831d(a).

The Georgia Act in issue, Ga.Code Ann. §§ 16-17-1 to 16-17-10 (2004), targets Georgia businesses and precludes in-state payday stores from directly making payday loans in Georgia. No one challenges *1293Georgia’s right to preclude in-state stores or even in-state banks from making payday loans at these high interest rates.

To avoid this direct prohibition, however, payday stores have .entered into agency agreements whereby the stores procure such payday loans for out-of-state banks, but nonetheless, retain the predominate economic interest in the loans. To stop this practice, the Act restricts in-state payday stores from acting as agents for out-of-state banks in one, limited circumstance: where the agency agreement grants the instate agent “the predominate economic interest” in the bank’s payday loan, which the parties agree means that the payday stores hold more than 50% of the revenues from the loan. See Ga.Code Ann. § 16-17 — 2(b)(4). Georgia outlaws this one type of agency agreement to prevent in-state payday stores from circumventing Georgia’s usury laws and reaping the enormous revenues from payday loans.

The district court denied the plaintiffs’ motion for a preliminary injunction enjoining the enforcement of the Georgia Act. After review and oral argument, we conclude that the district court did not abuse its discretion in denying the plaintiffs preliminary-injunctive relief.

I. FACTUAL BACKGROUND

Given the complexity of this case, we first outline the principal players, the agreements at issue, and the relevant federal and state law.

A. The Principal Players

There are two distinct sets of plaintiffs in this case. The first set of plaintiffs is the out-of-state banks, such as Community State Bank and BankWest.1 The out-of-state banks have no physical locations in Georgia. Rather, the out-of-state banks offer payday loans in Georgia by contracting with independent, local payday stores that form the second set of plaintiffs.

The second set of plaintiffs are corporations, such as Advance America, First American Cash Advance of Georgia, Cash America Financial Services, and others that operate payday stores in Georgia. These payday stores are not banks or subsidiaries of banks. Rather, these payday stores are wholly independent businesses with physical locations in Georgia. For example, Advance America operates 89 payday stores in Georgia.

The payday stores operate not only in Georgia but in many states. In some states, there is no limit on the interest rate a payday store may charge a borrower. In such states, there is no need for these plaintiff payday stores to associate themselves with out-of-state banks. Rather, they are permitted to loan money directly to borrowers and charge any interest rate they wish.

In contrast, Georgia’s usury laws present a serious problem for the plaintiff payday stores. In Georgia, the maximum legal annual percentage rate (“APR”) for loans of $8,000 or less is 16%. See Ga. Code Ann. § 7-4-2(a)(2).2 This means that a payday store is' limited to the 16% APR provided under Georgia law if it attempts to loan money directly to its customers. However, under § 27(a) of the FDIA, a state-chartered bank is 'authorized to charge the rate of interest allowed under the laws of its charter state in any other state where it does business. Thus, an out-of-state bank is not limited by Georgia’s 16% cap.

*1294Accordingly, the local payday stores in this case have entered into arrangements with out-of-state banks to serve as their agents in Georgia. By doing so, the payday stores are marketing and procuring the high-interest rate loans in Georgia allowed in the charter states of the out-of-state banks.

The typical scenario is that a borrower goes to a payday store in Georgia, receives a single loan payment of up to $500, and signs a promissory note or loan agreement identifying the out-of-state bank as the lender. At the time of receiving the loan proceeds, the borrower often gives the payday store a post-dated check for the loan repayment plus finance charge. The loan matures within four to forty-five days, usually on the borrower’s next payday. On that day, the borrower must repay the principal, plus a finance charge of 17% to 27% of the principal, depending on the term of the loan. When the finance charge is calculated as an APR, it far exceeds the maximum permitted under Georgia law. In fact, the charges on a typical two-week payday loan have an APR between 442% and 520%.

The payday stores maintain many physical locations in Georgia and pay all costs associated with maintaining those locations, including rent, equipment costs, staffing costs, taxes, and advertising. Although the out-of-state bank advances the initial loan funds, the payday stores market the loans, process applications, collect loans after maturity, submit reports about the loans to the out-of-state bank, and remit the loan payments to a local bank account in the out-of-state bank’s name. As detailed later, the payday stores effectively do all the work and retain 81% of the loan revenues.

The defendant in this case is, essentially, the State of Georgia. As discussed below, the State of Georgia prohibits Georgia-licensed businesses, such as the plaintiff in-state payday stores from (1) making payday loans directly to borrowers, and (2) acting as agents when paid the predominate economic interest in the payday loan.

B. The Contracts

Just as there are two types of plaintiff in this case, there are two types of contract. First, there is the contract between the out-of-state bank and the borrower. The relationships between the out-of-state banks and the borrowers are governed by written loan contracts. In the consumer loan contract provided by plaintiff Ban-kWest, which we have been led to believe is typical, BankWest is identified as “the Lender” and Advance America, the payday store, is identified as “the fiscal agent and loan marketer/servicer.” The loan contract discloses the APR of the loan, the total finance charge, the amount of the loan, and the total amount that will have to be repaid by the borrower. The first page of the loan contract, which contains all of the financial terms of the loan, is signed by only the borrower and BankWest.3 Thus, BankWest, as the lender, sets the terms and features of the loans.

Second, there is also the entirely separate contract between the in-state payday store and the out-of-state bank. It is the in-state payday stores’ agency relationships that the State of Georgia has attempted to regulate, but only when the payday store retains the predominate economic interest in the loan revenues.

The agreement between plaintiffs Advance America (an in-state payday store) and BankWest (an out-of-state bank) is in *1295the record, and again we have been led to believe that it is typical. Under the agreement, Advance America pays for all costs related to its storefront locations and employees.4 Advance America procures the borrower and submits a loan application to BankWest. BankWest then approves (or denies) the application and advances all funds. BankWest uses a separate third-party “loan processing agent” (referred to as “Tele-Track” in the record) to electronically approve applications.5

In addition, if a borrower does not pay back the loan, the agreement transfers part of the loan loss to Advance America.6 Every three months, the total amount of BankWest loans that Advance America cannot collect (known as loan loss) is calculated. If the loan loss is 8.5% or less of the total amount of the finance charges (which are 17% : of the loan) over that period, then BankWest absorbs the loss.7 That means BankWest absorbs the first 1.45% (8.5% of 17%) of the total loan amounts. However, if the loan loss exceeds 8.5% of the finance charges, Ban-kWest reduces the amount owed to Advance America for its services by that excess up to 13.8% of the total loans made. In other words, BankWest absorbs the loan losses up to the point where they equal 1.45% of the total loans, and Advance America absorbs the losses to the extent they exceed 1.45% up to 13.8% of the total loans. If the loan losses exceed 13.8% of the total loans, BankWest bears the remaining risk of loss.8

*1296Further, the agreement allocates the loan revenues largely to Advance America. The agreement states that the maximum amount of any loan is $1,000 and that borrowers are charged $17 for every $100 borrowed.9 That is the finance charge. Advance America’s total compensation is a $13.80 “marketing and servicing fee” for every $100 advanced to a borrower.10 As a result, Advance America, the payday store, receives 81% ($13.80 out of $17) of the loan revenues generated by the finance charge. The parties do not dispute the fact that, under their agency agreements with the out-of-state banks, the plaintiff payday stores have the predominate economic interest in the revenues generated by the payday loans in issue.

C. The Relevant Federal and State Law

1. Federal Law

As noted earlier, in Georgia, there is a 16% cap on the interest rate that in-state payday stores, and even instate banks, may charge for loans under $3,000. Georgia, however, cannot prevent an out-of-state bank from charging its higher home-state interest rates because § 27(a) of the FDIA authorizes a state-chartered bank to charge the interest rates allowed under the laws of its charter state in any other state where it does business. Specifically, FDIA § 27(a) covers “any loan” of the out-of-state bank but addresses solely the interest-rate element of the loan, as follows:

In order to prevent discrimination against State-chartered insured depository institutions, ... such State bank ... may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, ... charge on any loan ... interest ... at the rate allowed by the laws of the State ... where the bank is located....

12 U.S.C. § 1831d(a).

Georgia recognizes that the plaintiff out-of-state banks in this case are authorized to charge the high-interest rates of 400-500% under the laws of their charter states.11 Given § 27(a), Georgia cannot regulate or restrict out-of-state banks acting for themselves from charging these high-interest rates on out-of-state bank loans in Georgia. Georgia does not dispute that “any” means “any loan” of the out-of-state bank. As explained later, this is why Georgia has exempted out-of-state banks throughout the payday loan Act in issue.

2. State Law

What Georgia says it has the power to regulate in the Act are in-state payday stores in these two ways: (1) to prohibit in-state payday stores from making payday loans directly to borrowers; and (2) to restrict in-state payday stores from acting as agents for exempt entities in the one circumstance where the in-state payday store holds the predominate economic interest in the payday loans.

Specifically, in April 2004, the Georgia legislature enacted Senate Bill 157, 2004 Ga. Laws 440, now codified in Georgia Code Ann. §§ 16-17-1 to 16-17-10. The Act contains findings that even though the Georgia Attorney General had deemed *1297payday loans with excessive interest rates to be illegal under previously existing state law, and even though the Georgia Industrial Loan Commissioner had issued- cease- and-desist orders to payday stores, the payday stores have continued their usurious practices. Ga.Code Ann. § 16-17-1(b).12 The purpose of the Act, according to the legislative findings contained within it, is to provide “sufficient deterrents” to “cause this illegal activity to cease.” Id.

The Act declares payday loans unlawful in Georgia. Specifically, the Act declares it “unlawful for any person to engage in any business ... which consists in whole or in part of making, offering, arranging, or acting as an agent in the making of loans of $3,000 or less” if that loan violates, among other things, Georgia’s usury laws. Id. §§ 16-17-2(a), (a)(1)(E), (a)(1)(G).13 Although § 16-17-2(a) of the Act declares these payday loans unlawful, § 16-17-2(a)(3) grants an explicit exception to out-of-state banks under this section of the Act. See Ga.Code Ann. § 16-17-2(a)(3).14 Thus, the Act does not prohibit out-of-state banks from making payday loans at high-interest rates in Georgia.

Further, the main purpose of the Georgia Act is to regulate in-state payday lenders and not out-of-state banks. The Act exempts out-of-state banks from the definition of payday lenders and payday lending, § 16 — 17—1(a);15 it explicitly exempts *1298out-of-state banks from the prohibited-conduct sections, §§ 16-17-2(a) and (b); it exempts out-of-state banks from the provision regulating choice of law and choice of forum clauses in loan contracts, § 16-17-2(c)(1);16 it exempts out-of-state banks from the civil monetary penalties in §§ 16-17-3 and 16-17-4 because those provisions are limited to only violations of §§ 16-17-2(a) and (b), which exempt out-of-state banks; it revokes the business license of Georgia businesses and only if they engage in “payday lending,” the definition of which excludes out-of-state banks, §§ 16-17-7, 16-17-l(a); it designates the site or location where “payday lending” takes place in Georgia a public nuisance and out-of-state banks are exempt from the definition of payday lending, §§ 16-17-8, 16-17-l(a). In short, the Act attempts to regulate instate payday lenders and not out-of-state banks.

In addition to prohibiting in-state payday stores from making payday loans directly, Georgia has declared agency arrangements between payday stores and exempt entities, where the payday store has “the predominant economic interest” in the loan revenue, to be an unlawful scheme or contrivance designed to allow the in-state payday stores to circumvent Georgia’s usury laws. Specifically, Georgia

declares that the use of agency or partnership agreements between in-state entities [payday stores] and out-of-state banks, whereby the in-state agent holds a predominate economic interest in the revenues generated by the payday loans made to Georgia residents, is a scheme or contrivance by which the agent seeks to circumvent ... the usury statutes of this state.

Ga.Code. Ann. § 16-17-l(c). It is this single type of agency or partnership relationship that Georgia regulates by the Act. Georgia has done so to prevent in-state payday stores that keep the predominate economic interest in local payday loans from circumventing Georgia’s 16% cap by partnering with out-of-state banks.

Section 16-17-2(b)(4) of the Act explicitly makes “[a]ny arrangement by which a de facto lender [payday store] purports to act as the agent for an exempt entity [out-of-state bank]” unlawful if the “entire circumstances of the transaction show that the purported agent holds, acquires, or maintains a predominant economic interest in the revenues generated by the loan." Id. § 16-17-2(b)(4) (emphasis added). The predominate economic interest requirement is fulfilled by one criteria: the in-state payday store receives over 50% of the revenue from the loan. Id}17

Because the prohibited agency conduct in § 16-17-2(b)(4) is subject to the exceptions in § 16-17-2(a), the Act also specifically exempts out-of-state banks from the reach of § 16-17-2(b)(4). See id. §§ 16-17-2(a)(3), (b). Again, the Act targets the conduct of in-state payday stores, not out-of-state banks.

*1299Thus, the Act has no application when out-of-state banks act for themselves or act through an in-state agent (even a payday-store agent) who is paid less then 50% of the revenue from a payday loan. If, however, an out-of-state bank enters into an agreement with an in-state payday store that allows the independent payday store to have the predominate economic interest (by earning more than 50% of the revenue from a payday loan), the payday store, and not the out-of-state bank, is liable for damages under the Act. Although the Act does not empower Georgia to prosecute an out-of-state bank directly as a principal party to the agency agreement, the Act does prohibit the in-state agent, acting pursuant to an unlawful contract, from collecting the payday loans and declares that the payday loans procured by the in-state payday store are void ab initio. See Ga.Code Ann. § 16-17-3.

In addition, § 16 — 17—2(d) of the Act imposes penalties on payday stores that: (1) make payday loans directly in their own name; or (2) undertake to make prohibited secondary agreements between themselves and out-of-state banks, whereby the payday stores maintain the predominate economic interest from payday loans made in the bank’s name.18 See id. § 16 — 17—2(d).

II. PROCEDURAL HISTORY

Immediately after the Georgia Act was enacted on April 9, 2004, the payday stores and out-of-state banks filed a total of four lawsuits against the Georgia Attorney General, the Georgia Secretary of State, or both of them, seeking temporary restraining orders and preliminary and permanent injunctions against enforcement of the Act, as well as declaratory judgments that the provisions of the Act that apply to them are preempted by federal law and are unconstitutional. The district court consolidated the four cases and heard argument on the motions for preliminary injunction. Because the Act was scheduled to go into effect on May 1, 2004, the district court entered a temporary restraining order prohibiting enforcement against the plaintiffs until May 15, 2004.

Two days before the scheduled expiration of the TRO, the district court denied the plaintiffs’ motions for a preliminary injunction and refused to enter an injunction pending appeal.19 The district court found that the plaintiffs did not demonstrate a likelihood of success on the merits as to any of their claims. The district court also decided that the balance of harms favored Georgia and weighed against issuing an injunction, and that en*1300joining enforcement of the Act would harm the public interest. The district court did find that the plaintiffs would be irreparably harmed if the Act were enforced against them, and the parties do not dispute that finding.20

The plaintiffs filed notices of appeal as well as motions asking this Court to issue an injunction pending appeal. We denied the motions for an injunction pending the appeal but did expedite the appeal. As things stand now, the Act has been in effect since May 25, 2004, when the district court’s extended TRO expired.

III. STANDARD OF REVIEW

We generally review the district court’s denial of an injunction only for an abuse of discretion. See Delta Air Lines, Inc. v. Air Line Pilots Ass’n, Int’l, 238 F.3d 1300, 1308 (11th Cir.2001). However, determinations of law made in the course of denying a preliminary injunction are reviewed de novo. Bailey v. Gulf Coast Transp., Inc., 280 F.3d 1333, 1335 (11th Cir.2002). “ ‘A district court by definition abuses its discretion when it makes an error of law.’ ” United States v. Pruitt, 174 F.3d 1215, 1219 (11th Cir.1999) (quoting Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 2047, 135 L.Ed.2d 392 (1996)). As to findings of fact made in the course of denying a preliminary injunction, “the trial court is in a far better position than this Court to evaluate [the] evidence, and we will not disturb its factual findings unless they are clearly erroneous.” Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167, 1171 (11th Cir.2002) (internal citations omitted).

IV. DISCUSSION

The plaintiffs' raised five claims in the district court but press only three of them here. Those three claims are that the Georgia Act: (1) is preempted by § 27(a) of the FDIA; (2) violates the dormant Commerce Clause; and (3) violates the Federal Arbitration Act. Before discussing these issues, we address what deference is due to Federal Deposit Insurance Corporation (“FDIC”) positions regarding preemption.

A. Chevron

The parties dispute what position the FDIC has taken on the preemption issue here. The out-of-state banks and payday stores point to certain statements made by various FDIC officials suggesting one view and Georgia points to various other documents that it suggests indicate that the FDIC has a different view on the preemption issue. However, the threshold issue for us is whether the FDIC’s view is entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).21

Putting aside the question of what the FDIC’s position is, see Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 1662-63, 146 L.Ed.2d 621 (2000) (interpretations in opinion letters, policy statements, manuals, and the like do not warrant Chevron deference), it is clear to us that no deference is due.

The reason is that we do not defer to agency positions, whether formal or informal, on preemption issues. See Smiley v. Citibank (South Dakota), 517 U.S. 735, 744, 116 S.Ct. 1730, 1735, 135 L.Ed.2d 25 (1996) (distinguishing between the “sub*1301stantive (as opposed to pre-emptive) meaning of a statute,” on which deference must be granted, and “the question of whether a statute is pre-emptive”); see also Nat’l Mining Ass’n v. Sec’y of Labor, 153 F.3d 1264, 1267 (11th Cir.1998) (citing Colo. Pub. Utils. Comm’n v. Harmon, 951 F.2d 1571, 1579 (10th Cir.1991)). Because “a preemption determination involves matters ... more within the expertise of the courts than within the expertise of’ an administrative agency, we need not defer to an agency’s opinion regarding preemption. Colo. Pub. Utils. Comm’n, 951 F.2d at 1579. That side issue settled, we turn now to our own determination of the preemption issue.

B. Preemption

There are three types of preemption: express preemption, field preemption, and conflict preemption. Express preemption occurs when “Congress has manifested its intent to preempt state law explicitly in the language of the statute.” Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1122 (11th Cir.2004). Field preemption occurs when “federal regulation in a legislative field is so pervasive that we can reasonably infer that Congress left no room for the states to supplement it .... ” Id. Conflict preemption arises either when “it is impossible to comply with both federal and state law” or “when state law stands as an obstacle to achieving the objectives of the federal law.” Id. Because the field preemption and conflict preemption issues are easily resolved, we address them first.

C. Field Preemption

With regard to field preemption, it is clear that the FDIA was not intended to “occupy the field” of state bank regulation. In the case of state-chartered banks, the FDIA itself makes it clear that while state banks are subject to some federal regulation, the states remain the “primary regulatory authority” over state banks participating in the FDIC’s deposit insurance program. See, e.g., 12 U.S.C. §§ 1813(r) (defining “State bank supervisor” as state officer, agency, or other entity with primary regulatory authority over state banks); 1820(h)(1)(A) (granting State bank supervisor regulatory authority over state banks with respect to state laws governing, among other things, fair lending and consumer protection); 1831a(i) (providing that the section governing activities of insured state banks “shall not be construed as limiting the authority of ... any State supervisory authority to impose more stringent restrictions”).22

*1302Although § 27(a) authorizes state banks to export their home interest rate to another state, the FDIA expressly acknowledges that the host state’s consumer and fraud laws still apply to the exporting state banks. 12 U.S.C. § 1820(h)(1)(A) (providing that the state bank supervisor may examine branches operated in such state by an out-of-state bank “for the purpose of determining compliance with host state laws, including those governing banking, community reinvestment, fair lending, consumer protection, and permissible activities”). Indeed, the activities of state banks are areas that traditionally have been regulated by the states. See Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 38, 100 S.Ct. 2009, 2016, 64 L.Ed.2d 702 (1980). For example, states have authority to regulate the establishment of in-state branches of banks and their activities. See e.g., 12 U.S.C. § 1831u(a)(4)-(5). Therefore, we readily conclude that there is no field preemption of the State’s power to regulate state banks.

D. Conflict Preemption

With regard to conflict preemption, this is not a case where compliance with both the state and federal laws is impossible. As in Barnett Bank of Marion Comity v. Nelson, “[t]he two statutes do not impose directly conflicting duties on [state] banks — as they would, for example, if the federal law said, ‘you must [export your home-state interest rate],’ while the state law said, ‘you may not.’ ” 517 U.S. 25, 31, 116 S.Ct. 1103, 1108, 134 L.Ed.2d 237 (1996). Therefore, the conflict preemption question turns on whether the Act “stands as an obstacle to achieving the objectives of the federal law,” Hughes v. Att’y Gen. of Florida, 377 F.3d 1258, 1265 (11th Cir.2004) (citing Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372-73, 120 S.Ct. 2288, 2294, 147 L.Ed.2d 352 (2000) and Cliff, 363 F.3d at 1122), or whether the Act substantially impairs the right created by the federal law. Barnett Bank, 517 U.S. at 33, 116 S.Ct. at 1109. For the following reasons, the Act does not stand as an obstacle to achieving this objective or substantially impair the right created by the federal law, and, therefore, there is no conflict preemption.

First, and most important, the Act provides a complete exemption to out-of-state banks for liability under the Act. See Ga.Code. Ann. §§ 16-17-2(a)(3), (b). Therefore, out-of-state banks acting for themselves are free to charge Georgia borrowers their home state interest rates as authorized by § 27(a) of the FDIA without being subject to any liability under the Act.

Second, the Act does not prohibit out-of-state banks from using independent agents, including payday stores, or other partnerships to make payday loans at their home-state interest rates in Georgia. Rather, the Act restricts out-of-state banks from only one limited type of agency: using a separate, in-state business entity in Georgia that holds “a predominant economic interest” in the loan revenues. Ga.Code Ann. § 16-17-2(b)(4).

In addition, the Act leaves open other alternatives for out-of-state banks to export their home-state interest rates to Georgia borrowers. Given modern technology and communications in today’s economic world, out-of-state banks have a plethora of distribution channels to use in exporting their home state interest rates to Georgia borrowers.

*1303In sum, nothing in the language of § 27(a) gives out-of-state banks the sole and exclusive right to use independent, instate payday stores as agents or to define the nature of their relationship with those payday stores. Consequently, we conclude that there is no conflict preemption.

E. Express Preemption

1. Section 27(a) Preempts State Law

As stated above, express preemption occurs when “Congress has manifested its intent to preempt state law explicitly in the language of the statute.” Cliff, 363 F.3d at 1122. Section 27(a) of the FDIA states that “notmthstanding any State constitution or statute which is hereby preempted for the purposes of this section,” an out-of-state bank may charge on any loan the rate of interest allowed by the laws of its charter state. 12 U.S.C. § 1831d(a). Therefore, this is obviously a case in which the federal statute preempts some forms of state law.

Because this is an express preemption case, § 27(a) preempts “something” and precludes state laws on that “something.” Accordingly, the question is whether the language of § 27(a) preempts the Georgia Act, not whether Congress intended to preempt state legislation when enacting § 27(a). In turn, this case presents two sub-questions of statutory interpretation that must be answered. The first question is what is the scope of the express preemption accomplished by § 27(a)’s plain language which provides that a “State bank ... may ... charge on any loan ... interest ... at the rate allowed by the laws of the State ... where the bank is located.” 12 U.S.C. § 1831d(a). The second question is whether the Georgia Act falls within the scope of § 27(a).

2. Statutory Interpretation Principles

When Congress expressly codifies its preemptive intent in statutory form, our analysis “begins with the language of the statute.” Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 542, 121 S.Ct. 2404, 2415, 150 L.Ed.2d 532 (2001). Our task of statutory interpretation must also be guided by Medtronic, Inc. v. Lohr, 518 U.S. 470, 484, 116 S.Ct. 2240, 2250, 135 L.Ed.2d 700 (1996), where the United States Supreme Court addressed a federal statute that “expressly pre-empts state law.” The Supreme Court noted that in such express-preemption situations “our interpretation of [the preemptive] language does not occur in a contextual vacuum. Rather, that interpretation is informed by two presumptions about the nature of pre-emption.” Id. at 485, 116 S.Ct. at 2250.

“First, because the States are independent sovereigns in our federal system, we have long presumed that Congress does not cavalierly pre-empt state-law ..., particularly in those [areas] in which Congress has legislated in a field which the States have traditionally occupied.” Id. (internal quotation marks, punctuation, and citations omitted). In such situations, it is important to give the statute a narrow construction in order to be consistent with both federalism concerns and the historic primacy of state regulation. See id.; Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518, 112 S.Ct. 2608, 2618, 120 L.Ed.2d 407 (1992). As noted earlier, states and state regulators have traditionally regulated state banks, and remain the primary regulatory authority.

Second, the Supreme Court has instructed that in interpreting a federal statute, including one that expressly preempts state law, federal courts must consider Congressional intent and purpose, as these are the “touchstone in every pre-emption case.” Medtronic, 518 U.S. at 485, 116 *1304S.Ct. at 2250 (internal quotation marks and citations omitted).

As a result, any understanding of the scope of a pre-emption statute must rest primarily on a fair understanding of congressional purpose. Congress’ intent, of course, primarily is discerned from the language of the pre-emption statute and the “statutory framework” surrounding it. Also relevant, however, is the structure and purpose of the statute as a whole, as revealed not only in the text, but through the reviewing court’s reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law.

Id. at 485-86, 116 S.Ct. at 2250-51 (internal quotation marks and citations omitted).

The Supreme Court has set out the governing framework courts should follow.

In these cases, our task is to identify the domain expressly pre-empted, because an express definition of the preemptive reach of a statute supports a reasonable inference that Congress did not intend to pre-empt other matters.... Because federal law is said to bar state action in a field of traditional state regulation ... we work on the assumption that the historic police powers of the States are not to be superseded by the Federal Act unless that is the clear and manifest purpose of Congress.

Lorillard Tobacco, 533 U.S. at 541-42, 121 S.Ct. at 2414 (internal quotation marks, citations, and punctuation omitted). We now turn to the language of § 27(a).

3. Scope of § 27(a)

According to the plain language of § 27(a), the domain of law expressly preempted by § 27(a) are state laws which prohibit:

1. a State bank;

2. from charging interest at the rate allowed by the home State;

3.on any loan.

The language of § 27(a) refers only to state banks, and does not address non-bank businesses, such as payday stores, at all.

Even as to “any” loan of state banks, the language of § 27(a) does not mention any other element or term of the loan other than interest rates. Importantly, it does not mention any collateral activity associated with the loan, such as marketing, advertising, solicitation, or any aspect of the loan procurement process. It does not mention collection practices associated with the loan. Indeed, it is not disputed that state consumer protection and fraud laws may regulate an out-of-state-bank’s activities associated with its loan. Further, nothing in § 27(a) regulates separate contracts between out-of-state banks and in-state vendors to which the borrower is not even a party (such as the agency agreements here). The apparent clarity of § 27(a)’s language is, at least, important evidence of legislative intent.

So while an out-of-state bank in Georgia clearly can make a payday loan at a 500% APR, the State of Georgia, nonetheless, may regulate an out-of-state bank’s procurement and collection practices in Georgia. See 12 U.S.C. § 1820(h)(1)(A).

In the same vein, the language of § 27(a) does not mention in-state, non-bank agents or agents at all, or expressly permit out-of-state banks to use any instate business or person it happens to select as an agent. For example, Georgia has the right to require payday stores to be licensed and out-of-state banks could not use an in-state agent who is not licensed to do business in Georgia. There is no language in § 27(a) addressing which local, non-bank vendors may properly act as agents in loan transactions or under what circumstances local, non-bank vendors may so act. Nothing in § 27(a) seeks to regulate the entirely separate agency *1305contracts entered into between out-of-state banks and payday stores. Instead, the scope of § 27(a) is quite narrow and restricted to one element of any loan by out-of-state banks: the interest rate.23

k. The Georgia Act

The next question'is whether the Georgia Act falls within the above preemptive scope of § 27(a). The Act contains a sev-erability provision, and thus we proceed section-by-section through the Act.24

Obviously, § 27(a) expressly preempts certain state legislation. For example, if Georgia had enacted legislation that said “out-of-state banks cannot charge interest rates on any loan greater than Georgia’s 16% cap,” we would have no difficulty determining that such state legislation was expressly preempted by § 27(a).

On the other hand, as discussed above, Georgia can regulate a variety of collateral activities associated with loans. If Georgia had enacted legislation that precluded felons convicted of fraud from being licensed fiscal agents in loan transactions in Georgia or precluded banks (including out-of-state banks) from employing such felons in Georgia as third-party vendors or service providers to handle loan funds, we would have no difficulty determining that such state legislation was not preempted by § 27(a). None of the parties dispute Georgia’s ability to regulate agency arrangements between in-state felons and out-of-state banks. Likewise, no one disputes Georgia’s ability to regulate in-state businesses, such as the local payday stores in this case.

Therefore, the first question is whether the Act, and in particular § 16 — 17—2(b)(4), is a prohibited interest-rate limitation on loans between BankWest and its borrowers or a permitted agency regulation on when non-bank payday stores operating in Georgia may properly serve as agents for out-of-state banks.25

5. Section 16-17-2(b) (4) of the Georgia Act

For the following