State AGs blow whistle on OppFi, Enova deals

State regulators are fighting a new trend that could change how subprime lending works for your customers. Twenty state attorneys general are asking federal regulators to block two major deals: OppFi’s attempt to buy First Net Bank and Enova’s move to acquire a stake in Republic Bank & Trust. These fintech companies are well-known for offering high-interest loans and personal lending products often used by consumers who don't qualify for traditional bank credit. For merchants, this matters because it impacts the 'rent-a-charter' model. Currently, many fintech lenders partner with banks to ignore state-level interest rate caps. By buying the banks themselves, these lenders hope to shield their high-interest products from state lawsuits permanently. The attorneys general argue that letting non-bank lenders own banks will lead to predatory lending and trap consumers in debt cycles. If these acquisitions are blocked, it could mean stricter interest rate limits in several states. This could reduce the approval rates for your credit-challenged customers or force lenders to change their terms. Monitoring these deals is critical for any retailer that relies on second-look or subprime financing to close sales.

Source: Banking Dive

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