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Enova and OppFi charge interest rates that can reach 100%, 160%, and even 195%. Now they each want to buy a national bank so they can bypass local laws and push those predatory loans into states that have outlawed them. That’s right, it’s a clever trick to work around consumer protections using a loophole in federal law. Enova International is the company behind CashNetUSA, NetCredit, and OnDeck. It has applied to acquire Grasshopper Bank. Opportunity Financial, better known as OppLoans, has announced plans to acquire BNC Bank. If the Federal Reserve allows these deals to move forward, the resulting institutions could become the first national banks whose central business models are built around predatory loans. Here’s how it works: National banks can generally charge the interest rates based on what’s allowed in their home state – that’s the state the bank is headquartered in – even when lending to people in other states. Enova and OppFi want to exploit that privilege to bulldoze through protections that voters and legislatures enacted across the country. A $2,000 loan at 100% APR is prohibited in 43 states, but these acquisitions could let the lenders reach into those states and impose their debt-trap rates anyway. The evidence already shows what these loans do. Enova’s consumer loan charge-offs have exceeded 50%. OppFi offers installment loans with APRs reaching 195%, has reported a net charge-off rate of 51%, and reportedly generates most of its OppLoans income through repeated refinancing that keeps borrowers trapped in extraordinarily expensive debt. These are not occasional failures around the edges of an otherwise responsible product. These failures are built into the business model to maximize profits with no regard for the impact on consumers.
Enova’s record makes approval even more indefensible. Consumer and civil rights advocates found a disproportionate concentration of complaints against the company in predominantly Black and Latino communities. In 2023, the Consumer Financial Protection Bureau labeled Enova a repeat offender after finding that it continued illegal conduct following an earlier enforcement order, including unauthorized withdrawals and deceptive statements to borrowers. A national bank charter is a public privilege. It should never be handed to companies so they can evade democratically-enacted consumer protections, drain struggling families through unaffordable payments, and turn a federal banking license into a nationwide pipeline for predatory lending. The Federal Reserve can stop that dangerous precedent before it spreads, but only if the public forces the Board to confront what these acquisitions are really designed to accomplish. Thank you for standing up to predatory lenders and fighting for a financial system that serves people, not debt-trap profiteers. - Tom. Tom Feltner (he/his)
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