In their comment letter filed February 23, the National Community Reinvestment Coalition (NCRC) and its member organization, the Woodstock Institute, urged the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB) to reject Enova International, Inc.’s application to merge with Grasshopper Bank.
Enova has a long history of predatory lending and regulatory noncompliance. Enova offers extremely predatory payday and installment loans to consumers and small businesses that have astronomical interest rates ranging from 36% to 300%. Additionally, Enova has resisted attempts to regulate it with its failure to comply with a 2019 Consumer Financial Protection Bureau consent order resulted in a second one in 2023.
“There is no place for predatory lending in the federal banking system,” said NCRC’s President and CEO Jesse Van Tol. “Regulators should not hand a federal banking platform to a company with a track record of 300% loans and regulatory noncompliance. This merger would legitimize predatory lending under the banner of a bank. Authorizing Enova to merge with Grasshopper will also allow Enova to continue to cause harm to consumers and small businesses and undermine public confidence in the banking system.”
“Given Enova’s repeated history of partnering with banks to evade state law and make near-triple-digit interest loans to the most financially vulnerable, we must assume that approval of this acquisition will only be a boon for their predatory activities,” said President and CEO of Woodstock Institute Horacio Mendez. “Since the Illinois 36% APR cap on consumer loans went into effect in 2021, Illinoisans have saved more than $600 million in high-cost loan fees each year. If the federal government chooses to rubber-stamp Enova’s predatory lending by allowing it to become a bank, those savings will be whittled away as loan fees and high interest drain money from consumers’ pockets across the country.”
As a high-cost, repeat-offender lender, Enova should not be granted the privilege of a bank charter. Additionally, merging with Grasshopper, a full digital bank, would allow Enova full access to the banking ecosystem. This merger is designed to expand the combined companies’ footprint but will result in decreasing the bank’s community reinvestment obligations.
To read the full comment letter, visit this link.
