U.S. Sen. Elizabeth Warren (D-MA) has expressed concerns to federal financial regulators about Opportunity Financial’s application to acquire BNC National Bank and become a newly formed bank holding company.
Warrenʻs says her concerns stem from the company’s history of what she calls 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,’’ Warren wrote in 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.
When determining whether to approve OppFi’s proposed acquisition of BNC Bank, Warren urges the FDIC, Fed, and OCC to consider that 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. Further, Warren said OppFi’s public filings show charge-off rates upwards of 55 percent.
“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,” Warren wrote in the letter. “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.”
Warren added that the approval of OppFi’s application would also veer dramatically from President Donald Trump’s support for capping consumer lending expenses.
“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,” Warren said.
Warren is the ranking member of the Senate Banking, Housing, and Urban Affairs Committee.