Warren Urges OCC, FDIC, Fed To Block A Predatory Lender from Spreading Nationwide

Warren Urges OCC, FDIC, Fed To Block A Predatory Lender from Spreading Nationwide

"By acquiring BNC, OppFi would unlock the benefits of the bank's national bank charter for the purposes of expanding its predatory lending strategies to the national stage, side-stepping the interest rate caps of 45 states."

"The approval of its application would also veer dramatically from President Trump's promise to cap credit card interest rates at 10%."

Text of Letter (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Travis Hill, Chair of the Federal Deposit Insurance Corporation (FDIC), Jonathan Gould, Comptroller of the Currency, and Kevin Warsh, Chair of the Federal Reserve, to express concern regarding Opportunity Financial's ("OppFi") application to acquire BNC National Bank, a national bank subsidiary, and become a newly formed bank holding company despite the company's history of predatory lending.

"Though OppFi brands itself as a lender that 'empower[s] everyday consumers to overcome financial hurdles and build long-term financial stability,' a closer look into its business model reveals persistent, predatory financial strategies. OppFi charges up to 195% APR on personal installment loans [and] OppFi's charge-off rates (when a lender determines a debt is unlikely to be collected) exceed 55%. Notably, a 2021 filed by the D.C. Office of the Attorney General alleged that 'OppFi's underwriting model 'anticipates that up to one third of their borrowers will be unable to repay their loans and default,'' wrote Ranking Member Warren.

"OppFi is also known for evading state interest rate caps through bank 'partnerships'-a scheme known as 'Rent-A-Bank'... Rent-a-bank schemes are of questionable legality, and many courts have applied anti-evasion laws to pierce through these schemes and determine that the nonbank lender is the 'true lender' that must then comply with state interest rate laws," continued the Ranking Member.

"OppFi appears to be attempting to expand its predatory lending operations to all 50 states in the country by seeking to become a national bank [through acquiring BNC Bank] that enjoys the benefits of federal preemption."

Ranking Member Warren urges the FDIC, Fed, and OCC to consider the following facts when determining whether to approve OppFi's proposed acquisition of BNC Bank:

• OppFi's business model does not adequately ensure that borrowers have the ability to repay their loans-a core requirement of safe, sound and responsible lending.

• OppFi's public filings show charge-off rates upwards of 55%... a form of predatory lending that does not meet the convenience and needs of the community, as it leaves many borrowers far worse off.

• Approving this application would inflict even more financial pain on Americans struggling under President Trump's failing economic agenda, as Americans are carrying record levels of student loan, mortgage, and credit card debt amid surging costs.

The approval of OppFi's application would also veer dramatically from President Trump's nominal support for capping consumer lending expenses, as this acquisition would provide a lender that makes loans up to 195% APR with the green light to run its gambit more widely.

"Becoming a bank holding company with a bank charter requires compliance with clear statutory guidelines. The FDIC, OCC, and the Board are tasked with protecting the integrity of our banking system, and given the risks that OppFi's proposed acquisition poses to consumers and our financial system as a whole, I urge the OCC, FDIC, and the Board to reject OppFi's application to acquire BNC Bank," concluded Ranking Member Warren.

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