Enova International has withdrawn its applications to the Federal Reserve and the Office of the Comptroller of the Currency to acquire Grasshopper Bancorp, the fintech disclosed Monday. CEO Steve Cunningham said regulators "do not have clear standards for nonbanks that want to become banks and that serve customers whose credit needs today are met mostly outside of the banking system." He added that without clearly articulated standards, the process is "susceptible to political pressure and outside advocacy, rather than being guided strictly by the statutory factors that should govern it."
The withdrawal follows a July letter from 20 state and district attorneys general to the Fed, OCC and Federal Deposit Insurance Corp. urging rejection of the proposed deal over concerns it represented an effort "to avoid state usury laws." The AGs noted that most states have interest-rate caps, often 36% for small loans, while Enova partners with banks chartered in states with no caps. Senators Elizabeth Warren and Chris Van Hollen also urged denial, citing "Enova's history of predatory lending and regulatory noncompliance." The $369 million deal with Grasshopper was announced in December, when then-CEO David Fisher said acquiring a bank had been a longtime aspiration dating at least to 2020.
The withdrawal signals that Enova no longer sees a viable path to bank ownership under current regulatory conditions. Cunningham, who succeeded Fisher in January, said Enova's "future growth and success do not depend on becoming a bank." The company asserted it had "worked constructively and transparently with regulators" and believed its application satisfied statutory criteria. The OCC and Federal Reserve did not immediately comment on the withdrawal.
What remains unknown is whether Enova will pursue alternative structures, such as continued bank partnerships, or revisit a charter application if regulatory standards change. The dossier does not indicate any revised deal terms, termination fees, or next steps for Grasshopper Bancorp.