- Key insight: If Enova's deal for Grasshopper Bancorp gets approved, the high-cost lender will have a national bank charter, which will give it the ability to operate across the country without respect to state interest-rate caps.
- What's at stake: The deal marks the latest twist in the cat-and-mouse game over the regulation of high-cost lending.
- Forward look: Enova says it's still expecting to close the Grasshopper transaction in the second half of 2026.
A proposed bank acquisition that's under review by federal regulators has become a lightning rod in the long-running fight over the availability of high-cost consumer loans.
Enova International, a nonbank that lends at far higher rates than banks typically do, says that
But consumer advocates are pushing regulators to reject the deal, or at least to impose certain restrictions as part of an approval. They contend that allowing Enova to acquire a national bank charter would trample over the authority of states to regulate the interest rates offered within their borders.
"A national bank doesn't have a limitation in terms of its interest rate. So we could fight back against state-chartered banks, but there's no limitation on national banks," said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending.
The Enova-Grasshopper deal represents one of the latest twists in the cat-and-mouse game between high-cost lenders and states that want to impose strict interest-rate caps.
Those states won a legal victory in November, when a federal appeals panel ruled 2-1 that
Consumer advocates often refer to partnerships between state-chartered banks and high-cost nonbank lenders — arrangements that enable the exportation of interest-rate rules across state lines — as "rent-a-bank" schemes.
But in the case of the pending Enova-Grasshopper deal, the high-cost lender would own the bank. And because New York-based Grasshopper has a federal charter, state interest-rate caps wouldn't apply to its loans.
'Typical' or 'unprecedented'?
The Consumer Financial Protection Bureau hit Chicago-based Enova with one consent order in 2019 and another in 2023, accusing the company of debiting customers' bank accounts without their permission and failing to honor loan extensions. Enova was assessed penalties totaling $18.2 million.
But during the second Trump administration, federal regulators
During a call with analysts last week, Enova executives expressed confidence that the deal, valued at about $369 million when it was announced, will get approved on schedule.
"I think there's a process you go through when you file a formal application with the regulators. We're going through that process now. It's pretty typical for anybody who's applying for a bank charter, or to become a bank holding company," said Enova CEO Steve Cunningham.
"I think we're making progress, and we remain engaged on … what I would call a pretty typical application process," he added.
Nonetheless, consumer advocates say there are factors that make this merger different. They point out that Enova's NetCredit products, which have annual percentage rates of up to 99.99%, would be housed inside the company's bank.
"While some fintechs are associated with high-cost lending, it is unprecedented for a national bank to be associated with a loan program primarily focused on loans that are offered at 99.99% APR," the Center for Responsible Lending, the National Consumer Law Center and other advocacy groups wrote last week in a letter to Federal Reserve Chair Jerome Powell.
Another Enova product, CashNetUSA, charges even higher APRs. CashNetUSA's unsecured lines of credit have annual percentage rates between 149% and 325%, according to materials that Enova filed with the Fed. And CashNetUSA's unsecured installment loans, which have terms of five to 12 months, have APRs ranging from 222% to 579%.
In its application to the Fed, Enova states that the CashNetUSA business will be kept outside of its bank. But the consumer advocacy groups want the Fed to take a tougher stance. They wrote in their letter to Powell that if Enova's merger application gets waved through, the Fed must make it a "permanent, enforceable condition of approval" that CashNetUSA remains outside of the bank.
"Enova is carving out its most problematic product from the national bank — for now — because it cannot survive regulatory scrutiny," the consumer groups wrote. "And critically, it is a voluntary representation with no binding force — nothing in Enova's application prevents it from seeking to migrate CashNetUSA into the national bank after approval is secured."
The consumer groups also argue that customer complaints against Enova are centered around communities of color.
Out of 3,990 complaints against Enova that were filed with the CFPB after 2017, roughly half were from residents of majority-minorities areas, while just 36.6% of the U.S. population lives in such areas, the groups found.
"This raises alarms that the harms caused by Enova are disproportionately borne by communities of color. This disproportionality must be investigated," the consumer groups wrote in their letter to Powell.
The advocacy groups asked the Fed to hold a public hearing on Enova's merger application. The Fed declined to comment for this article.
Enova did not respond to a request for comment. But in its merger-application materials, the company argued that the Grasshopper merger will allow it to "further expand its ability to provide access to the banking system to underserved businesses and customers throughout the credit cycle."
"Enova's product set does this well today," the company wrote, "but will be strengthened in its ability to lend across the credit continuum when it can operate under a uniform federal legal framework and fund loans with low cost deposits."
