ATTORNEY GENERAL BROWN JOINS COALITION URGING FEDERAL GOVERNMENT TO DENY OPPORTUNITY FINANCIAL MERGER

The following information was released by the Maryland Attorney General:

Merger Would Grant OppFi a National Bank Charter, Allowing Triple-Digit Interest Rates

BALTIMORE, MD Attorney General Anthony G. Brown joined a coalition of 17 attorneys general in sending letters to the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB), urging the agencies to deny Opportunity Financials' (OppFi) application to acquire and merge with BNC National Bank, which would grant OppFi a national bank charter and enable the company to sidestep longstanding state lending laws.

OppFi is an online lender that targets consumers with financial struggles or low credit scores and offers installment loans with interest rates reaching nearly 200% APR. While OppFi advertises its loans as affordable and claims it provides a pathway to a better financial future, the reality is that borrowers often default on or refinance OppFi loans because they are unable to repay loans that carry triple-digit interest rates.

In their letters, Attorney General Brown and the coalition argue if OppFi gains a national bank charter and becomes a bank holding company, it would create an exponential increase of unaffordable, high-cost loans for consumers, as well as pose significant safety and soundness concerns for small businesses and the entire banking system. OppFi would also be able to circumvent important state usury laws that protect consumers from such high-interest loans, leaving attorneys general with little to no recourse in fighting back.

Attorney General Brown and the coalition explain in their letters that 45 states and the District of Columbia have state laws that prohibit such high interest rates. In Maryland, for example, it is unlawful to issue consumer loans with APRs above 33% for loans under $2,000. However, OppFi currently seeks to circumvent state laws by engaging in what regulators call "rent-a-bank" partnerships. In these schemes, OppFi partners with state-charted banks located in Utah, a state that does not have a hard interest rate cap, and exports interest rates allowed in Utah across state lines. However, these arrangements often draw legal scrutiny, giving states an ability to fight back. For example, Maryland's Credit Services Business Act prohibits non-bank lenders like OppFi from facilitating the offer of loans that would be usurious in Maryland.

To expand its high-cost lending and avoid the legal challenges involved in rent-a-bank partnerships, OppFi now seeks to acquire and merge with nationally chartered BNC National Bank to gain a national bank charter. It then plans to relocate BNC headquarters to Utah. If regulators allow this transaction, the company would take advantage of the National Bank Act's provision allowing nationally chartered banks to charge the maximum interest rate permitted in their home state. This would give OppFi free license to bypass state rate caps and offer its triple-digit interest loans throughout the country.

Attorney General Brown and the attorneys general claim that if OppFi or other lenders with similar business practices become national banks, it would prevent states from protecting their consumers from unfairly high-cost loans, set a dangerous precedent that could open the doors to other high-cost lenders gaining federal preemption over state consumer protections and erode the integrity of the national banking system.

Joining Attorney General Brown in sending these letters are attorneys general of Arizona, California, Connecticut, the District of Columbia, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Oregon, Rhode Island, Vermont, Virginia and Washington.