Sens. Chris Van Hollen, D-MD, and Elizabeth Warren, D-MA, urged nonbank lender OppFi to abandon its quest to buy Arizona-based bank holding company BNCCORP and subsidiary BNC National Bank.
The lawmakers allege OppFi’s business model is “built on predatory lending practices,” including interest on personal installment loans as high as 195% APR.
Weeks ago, Enova terminated its bid to buy Grasshopper Bank over a lack of “clear standards for nonbanks that want to become banks” and “political pressure,” according to Enova CEO Steve Cunningham. Van Hollen and Warren want OppFi to follow suit.
Both OppFi and Enova target consumers they bill as “underserved” by traditional banks due to credit reasons. The senators wrote: “Paired with the mounting opposition it has received to date in regards to its application and Enova’s appropriate decision to change course, we believe OppFi should withdraw its application to acquire a national bank, immediately.”
An OppFi spokesperson pushed back: “Politicizing and attacking OppFi’s bank charter application does a disservice to consumers who need access to credit.” The company argues transitioning into the regulated banking system will subject its business to rigorous federal oversight.
Warren and Van Hollen allege OppFi’s charge-off rate exceeds 55%, citing a 2021 D.C. attorney general lawsuit alleging OppFi’s underwriting anticipates up to one third of borrowers defaulting. They also allege aggressive refinancing to extend debt.
OppFi’s spokesperson said average loan duration is roughly four months and annualizing quarterly charge-offs inflates apparent charge-offs. Lifetime charge-off rate over the past three years was 18% to 25%.
The Enova-Grasshopper and OppFi-BNC deals were subject to a July letter from 20 state attorneys general urging OCC, FDIC, and Federal Reserve not to approve the deals. The AGs argued both lenders partner with banks in states with no interest rate caps to offer loans beyond 36% limits in most states.