The OCC should strip Oportun of CDFI status, not promote it by granting bank charter
Update: The Texas Tribune & ProPublica weighed in on Oportun’s application for a national bank charter Jan. 8.
Oportun, one of the few Community Development Financial Institutions (CDFIs) making consumer loans, has applied to Office of the Comptroller of the Currency (OCC) for a national bank charter.
In the financial services world, this would be a promotion. What makes this newsworthy is that Oportun has recently been in the news for all the wrong reasons.
Asked by media and consumer rights organizations about the high interest rates on its loans, Oportun recently made the decision to cap their interest rates at 36%. Shortly afterwards, the Texas Tribune and ProPublica exposed grossly abusive debt collection practices that include their habit of suing their borrowers in small claims court, where attorneys aren’t allowed and there are no requirements for interpreters.
This practice is particularly alarming given that Oportun claims to exist for the benefit of lower-income Latinx borrowers. Oportun’s response was to promise a 60% reduction in its filing of lawsuits. Even at this lower level, it would be the 5th most litigious debt collector in Texas and California … which should give you an idea of the outrageously large number of lawsuits Oportun files against its own borrowers to collect money.
CDFIs exist to counter financial institutions who prey on the desperate and excluded. Having one conduct itself in this manner should, at a minimum, force the Department of Treasury to revoke Oportun’s CDFI designation. It should also be cause for the OCC to use Oportun’s bank charter application as wrapping paper for its annual white elephant holiday party.
Oportun has a lot of trust to rebuild before anyone will think of them as anything but a CDFI in name only.