Read a press release on this proposed merger from Woodstock Institute and NCRC here.
Woodstock Institute joins the National Community Reinvestment Coalition (NCRC) in opposing Enova International’s application to become a bank holding company and acquire Grasshopper Bancorp, Inc. and Grasshopper Bank, N.A (“Grasshopper”).
Enova is a nonbank high-cost online payday and installment lender with a long history of regulatory noncompliance. The resulting merged entity would create unacceptable risks to low- and moderate-income (LMI) communities, small businesses, and to the safety and soundness of the financial system.
Enova has twice entered consent orders with the Consumer Financial Protection Bureau (CFPB) and since 2023 has received over 2,000 consumer complaints primarily centered on incorrect credit report information, unexpected interests and fees, and attempts to collect debt the consumers did not owe.
Enova also has a history of partnering with banks to evade state interest caps (a practice dubbed “rent-a-bank”) and offer consumer loans with APRs of almost 100%. If allowed to merge with Grasshopper, Enova will be able to offer high-cost loans nationwide in-house through the merged bank. They’d even be able to exploit their position as a bank to be exempted from the Illinois Predatory Loan Prevention Act. Despite this history and their nationwide business plan for the bank, the merged entity would have even fewer obligations to serve LMI communities as required under the Community Reinvestment Act (CRA).
We urge the Office of the Comptroller of the Currency and Federal Reserve to deny Enova’s application to acquire Grasshopper and become a bank holding company. Approval would grant Enova the privilege of taking deposits, accessing the Federal Reserve Discount Window, and using these sources of capital to fund risky high-cost loans, contradicting the OCC’s own longstanding position that predatory lending undermines public confidence and has no place in the federal banking system. The federal regulators must consider how a prospective merger would meet the “convenience and needs” of the communities to be served. Everything about this application – from the poor consumer compliance record to the unaffordable expensive high-cost loans – demonstrates that it fails to meet that standard.
