Twenty state attorneys general want regulators to put the kibosh on two deals in which high-cost nonbank lenders seek to buy banks, deals the attorneys general say incentivize predatory lending and leave consumers vulnerable to harm.
In a letter to the heads of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and Federal Reserve, attorneys general led by Kwame Raoul of Illinois called attention to high-cost lender Opportunity Financial’s $130 million purchase of an Arizona bank and high-cost lender Enova’s $369 million purchase of Grasshopper Bank.
State attorneys general have historically detected dangers to the financial system before the harm came to fruition, including subprime mortgages before the 2008 financial crisis, they noted.
“Now, we sound the alarm again,” they wrote.
“As the regulators that manage national bank charters, bank holding companies, and deposit insurance, you collectively determine who is allowed access to national banking privileges and what responsibilities and conditions they must meet,” they wrote. “We urge you to prohibit such access to entities that have a track record of brazenly attempting to evade state law and disregarding consumer protections.”
Attorneys general from Arizona, California, Colorado, Connecticut, District of Columbia, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington joined Illinois’ Raoul.
Nearly every state in the U.S. has an interest-rate cap, many at 36% for small loans and lower for large loans, they noted.
“This unequivocally demonstrates the will of the people — regardless of political party — to prevent unaffordable lending,” they wrote.
Enova and OppFi partner with banks chartered in states with no interest rate caps, the attorneys general wrote, allowing them to offer loans with interest rates well beyond 36%.
“These arrangements are deliberate efforts to avoid state usury laws and to extract profit from those that are in desperate need of money,” they wrote.
Spokespeople for Enova and OppFi defended their operations and their respective proposes acquisitions in emailed statements to Banking Dive.
"We currently serve our customers with a highly compliant, legally robust, and consumer-friendly product," an OppFi spokesperson said. "Moving this model into a regulated banking infrastructure will enable us to pair our proven product with extensive federal oversight, further strengthening our commitment to transparent and fair consumer lending."
Enova Chief Strategy Officer Kirk Chartier wrote that "[i]n contrast to the letter, 21 different state attorneys general recently filed an amicus brief in federal appellate court defending a state bank’s right to export home-state interest rates," noting that as a national bank, Enova "would operate under full federal banking agency supervision and consumer protections and in compliance with applicable federal and state laws and interagency lending guidance."
The attorneys general also called out regulators for granting national trust charters to cryptocurrency firms, saying such expansion “will amplify risk and instability to the financial system by embedding these risky business models into the fabric of the financial system” and “trigger a race to the bottom.”
Bank trade groups, too, have spoken out against national trust charters being granted to cryptocurrency firms.
Comptroller of the Currency Jonathan Gould told Banking Dive in October that “it’s better for it to be done within the banking system, if it’s legally permissible and can be done in a safe and sound manner, so that we can see it and monitor it, versus an ostrich approach, where we put our head in the sand and we’re not really observing what’s going on out there.”
Editor’s Note: This story has been updated to include comments provided by OppFi and Enova.
Facts Only
* Twenty state attorneys general, led by Illinois Attorney General Kwame Raoul, sent a letter to the OCC, FDIC, and Federal Reserve.
* The letter requests the prohibition of two acquisitions: Opportunity Financial’s $130 million purchase of an Arizona bank and Enova’s $369 million purchase of Grasshopper Bank.
* Participating states include Arizona, California, Colorado, Connecticut, District of Columbia, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington.
* Most U.S. states have interest-rate caps, frequently set at 36% for small loans.
* Enova and OppFi currently partner with banks in states that do not have interest rate caps.
* OppFi and Enova issued statements defending their business models and the legality of the proposed acquisitions.
* The attorneys general expressed opposition to granting national trust charters to cryptocurrency firms.
* Comptroller of the Currency Jonathan Gould stated in October that overseeing cryptocurrency activity within the banking system is preferable to an "ostrich approach."
Executive Summary
Twenty state attorneys general are urging federal regulators to block the acquisition of banks by nonbank lenders Opportunity Financial and Enova. The officials argue that these deals are designed to bypass state usury laws and interest-rate caps—often 36%—by leveraging the "exportation" privileges of national bank charters. They contend that such moves facilitate predatory lending and threaten consumer financial stability, drawing parallels to the warning signs seen prior to the 2008 subprime mortgage crisis.
Conversely, Enova and OppFi maintain that their products are compliant and consumer-friendly. They argue that integrating into a regulated banking infrastructure actually increases federal oversight and transparency. Additionally, the dispute extends to the broader regulatory environment, with the attorneys general and various bank trade groups opposing the issuance of national trust charters to cryptocurrency firms, while the Office of the Comptroller of the Currency suggests that bringing such activity into the regulated system is the safer alternative to ignoring it.
Full Take
The strongest version of this narrative is a conflict between state-level consumer protections and federal regulatory privileges. On one side, state officials view "rent-a-charter" strategies as a deliberate evasion of the democratic will (expressed via state usury laws). On the other, the lenders argue that federal oversight is the gold standard for safety and that national charters ensure a uniform, legal framework for credit access.
This situation reflects a recurring pattern of "regulatory arbitrage," where firms seek the most lenient jurisdiction to maximize profit. The narrative leverages a historical anchor—the 2008 financial crisis—to frame current corporate acquisitions not as business growth, but as systemic risks. However, there is a tension in the logic: the lenders claim that becoming a bank increases oversight, while the attorneys general claim that becoming a bank allows them to dodge the specific oversight (interest caps) that matters most.
The root cause is the inherent friction between federalism and the national banking system. If national charters can override state consumer protections, the "will of the people" mentioned by the attorneys general becomes secondary to federal administrative discretion. The second-order consequence is a potential "race to the bottom," where the most permissive state becomes the de facto regulator for the entire country.
Patterns detected: none
If this were a coordinated influence campaign, the playbook would involve maximizing the "moral panic" by linking current loans to the 2008 collapse to trigger an emotional regulatory response, while omitting the specific credit-needs of the customers who use these products. The actual content remains a standard reporting of a legal and regulatory dispute.
Bridge Questions:
1. To what extent do high-cost nonbank loans provide essential liquidity to populations that are entirely shut out of traditional banking?
2. Does the "exportation" of interest rates from a lenient state create an unfair competitive advantage that undermines the sovereignty of other states?
3. Would federal oversight actually mitigate the risks of predatory lending, or would it merely provide a veneer of legitimacy to high-interest products?
Sentinel — Human
This text appears to be a well-researched journalistic piece that synthesizes specific actions and expert commentary regarding financial regulation, exhibiting strong human editorial structure.