Enova scraps Grasshopper deal
The Chicago-based fintech withdrew its applications from the OCC and Fed, and its CEO decried the absence of “clear standards” for bank licensing, in addition to “political pressure.”
FinTech Enova International has abandoned its plans to acquire Grasshopper Bancorp, announcing the withdrawal of its applications to the Federal Reserve and the Office of the Comptroller of the Currency. Enova CEO Steve Cunningham expressed frustration over the lack of "clear standards" for bank licensing and the influence of "political pressure" on the process.
The move follows a surge in fintechs applying for banking licenses and regulators granting approvals. The attorneys general of 20 states had urged regulators to reject Enova's proposed deal due to concerns about avoiding state usury laws, which typically cap interest rates at 36% for small loans and lower for larger ones. However, Enova partners with banks in states without interest rate caps, allowing for higher rates.
Critics, including Senators Elizabeth Warren and Chris Van Hollen, argued that approving Enova's application would contradict President Trump's efforts to cap credit card interest rates at 10%. Other fintechs, such as OppFi, also had their applications for acquiring banks denied by state attorneys general. Enova's new CEO, Steve Cunningham, stated that the company's future growth and success are not dependent on becoming a bank, emphasizing their existing capabilities and new product innovations to meet the needs of underserved consumers and small businesses.
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