The letter lands two months after OppFi beat California's true-lender suit. The charter fight is the states' rematch, and every bank-partnership funding desk has a stake in how it ends.

The letter, dated July 15 and signed by attorneys general from 19 states and the District of Columbia, asks the three federal banking agencies to hold public hearings and to deny "bank charters, bank holding company applications, bank mergers and acquisitions, deposit insurance, or other banking privileges" for companies whose high-cost loans evade state usury laws. The core allegation is regulatory arbitrage: the AGs write that both lenders currently partner with banks chartered primarily in states without rate caps to offer loans "with interest rates reaching 195% and beyond," and that owning a charter would let them do the same thing everywhere, permanently, under federal preemption. "These arrangements are deliberate efforts to avoid state usury laws and to extract profit from those that are in desperate need of money," the coalition wrote, adding a deliberate historical echo: "Now, we sound the alarm again," a reference to state warnings about subprime mortgage lending before 2008.^{28 1 2}

The sharpest language is aimed at underwriting quality, not just price, and it spans two separate letters now sitting in the comment file. The July 15 letter states flatly that "Enova has charge-off rates over 50%" and that "[c]harge-off rates anywhere close to that level have never been tolerated in a national bank."²⁸ An earlier July 6 letter to the Fed, in which 14 state AGs and Hawaii's consumer protection office request a public hearing on the Enova application specifically, notes that Enova is "publicly reporting charge-off rates in excess of 50%" and concludes that "the high-cost, high-charge-off lending practices that characterize Enova's business is not traditional bank lending, and Enova should not be permitted to use a bank charter to spread such practices throughout the United States."^{29 1} The conclusions are the states' characterizations, contested by both companies, but the charge-off figure itself traces to Enova's own public reporting, and all of it is now part of the administrative record the agencies must work through.^{2 5}

Enova agreed on December 11 to buy Grasshopper Bank, a New York digital bank founded in 2019 with $1.4 billion in assets and roughly $3 billion in deposits as of September 30, 2025, for about $369 million in cash and stock. Grasshopper runs commercial and small business lending, SBA lending, and a banking-as-a-service platform; the deal needs OCC and Federal Reserve approval and was slated to close in the second half of 2026.⁶ When we covered the deal in December, we flagged regulatory approval as its biggest risk, including a merger provision allowing termination if regulators impose a burdensome condition. That risk now has 20 named opponents.⁷

OppFi followed on April 29 with a roughly $130 million cash-and-stock agreement, about 53 percent cash, to buy BNCCORP and its subsidiary BNC National Bank, a $1.1 billion-asset national bank, alongside a corporate simplification that eliminates OppFi's Up-C structure. That deal needs OCC, Federal Reserve, and FDIC approvals and targets a fourth-quarter 2026 close.^{8 9} Both timelines now run through a comment file that includes two multi-state AG letters and a 64-organization hearing request.^{4 5}

They did, and that is what makes the letter strategically interesting. On May 19, the Los Angeles County Superior Court finalized summary judgment for OppFi against California's DFPI, rejecting the state's theory that OppFi, not its partner FinWise Bank, was the "true lender" on loans carrying rates up to 160 percent APR. The court found FinWise controlled underwriting, funded and held title to the loans, and bore the primary risk of loss; the DFPI had sought at least $100 million in penalties.^{10 11} Having lost loan-by-loan in court, the states are moving the fight upstream to the charter gate, where the standard is not legality but whether an acquisition serves the convenience and needs of the community, and where regulators have wide discretion.¹

The record cuts both ways. Enova carries federal enforcement history the letter can point to: a 2019 CFPB consent order with a $3.2 million penalty for debiting consumer accounts without authorization, followed by a $15 million penalty in 2023 for unfair practices the Bureau found continued after the first order.^{13 14} OppFi, for its part, enters the process with a court-validated partnership model and an argument that a charter increases, rather than escapes, its supervision.^{10 2}

The legal theory in both letters is consumer credit law, and that limit should be stated plainly: state usury caps do not reach most commercial financing, and nothing in either letter asks regulators to restrict business lending. The AGs' own description of Enova does sweep in small business, the July 6 letter calls it "a nonbank lender that offers high-cost loans to consumers and small businesses," but the remedies invoked are consumer protections.²⁹ Still, the corporate structures under review are small-business lending platforms as much as consumer ones. Enova originates SMB credit through OnDeck, Headway Capital, and The Business Backer, and Grasshopper is precisely the kind of SBA and sponsor bank an SMB book wants behind it.⁶

The Bitty timeline deserves more than a clause. OppFi bought 35 percent of Bitty Advance in August 2024, a revenue-based funder that has financed more than 29,000 small businesses with products from $2,000 to $250,000, and the deal came with options to take majority ownership in 2027 and full ownership in 2030.^{12 16} Put the two timelines together: if BNC closes this year and the options are exercised on schedule, an MCA-style originator would sit majority-owned inside a federally supervised bank holding company as soon as next year, with full ownership and deposit funding behind it by 2030, on option terms already signed. Any funder pricing against Bitty should be reading this comment file as a preview of its own competitive landscape.

How does a consumer-credit objection reach the commercial book? Through the shared charter. Bank holding company approval attaches to the institution, not to a product line; the July 15 letter asks the agencies to deny the applications, the deposit insurance, and the banking privileges of the companies as such.²⁸ OnDeck and Bitty would never be judged under usury caps, but they would draw funding from the same balance sheet whose approval, insurance, and conditions all ride on the consumer book. If the applications stall or arrive carrying conditions on consumer-lending grounds, the deposit-funded cost advantage the SMB arms were about to inherit stalls with them, not because commercial lending is targeted, but because the charter is a single gate and both books stand behind it.

The recent precedent does. The OCC's Conditional Approval No. 1333, issued February 18, 2025, let SmartBiz, a fintech SBA marketplace, acquire Centrust Bank and become a national bank holding company, the first fintech-bank approval since 2021, and it came with conditions rather than a rejection.^{15 17} The queue behind these two deals has only grown since: as we covered on July 7, Klarna filed for a Utah industrial bank charter days after Affirm and OneMain entered the FDIC's application pipeline.¹⁸ The open question is not whether the agencies are willing to approve fintech acquisitions, they demonstrably are, but whether a coordinated 20-state record forces the Fed to hold the public hearings the 64-group coalition requested, and whether the clock that burns matters more than the outcome. Enova's own deal terms contemplate termination if approval arrives with a burdensome condition attached.^{7 4}

The Fed's hearing decision is the tell. A grant of public hearings on either application signals the Board is building a record for conditions or denial, and it would push both closings past their stated second-half and fourth-quarter 2026 targets. A quiet approval on schedule signals the SmartBiz template held against the strongest opposition yet assembled.^{4 15}

Read your bank-partnership exposure against the signatory map. Twenty AGs just told federal regulators, in writing, that partner-bank rate exportation is a scheme to evade their laws. The California ruling shows that theory losing in court when the bank genuinely underwrites, funds, and holds the risk; desks whose partner arrangements would not survive that same three-part look should treat the letter as a preview of discovery questions, not just charter politics.^{10 2}

Price the charter option honestly. The reason these fights matter is arithmetic: deposit funding at bank cost versus warehouse and securitization funding at market cost. If the approvals clear, expect more scaled funders to file, and expect the funding-cost gap between charter holders and everyone else to widen from the day each deal closes.^{6 17}

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The lender-liability sequel to a story we ran July 16. In early July, court-appointed receiver Phillip G. Young Jr. filed a counterclaim against Farm Credit Mid-America in the Eastern District of Tennessee, alleging the lender approved 28 separate draw requests totaling nearly $67 million between July 2022 and August 2023, each allegedly submitted by the whiskey maker's then-CFO without CEO Fawn Weaver's authorization, against barrel-inventory collateral reports the receiver says were falsified.^{19 20 21} The facility grew from $35 million to nearly $67 million in under a year, generating roughly $400,000 in amendment and origination fees for the lender, per the counterclaim.²⁰ Farm Credit rejects the allegations and moved to dismiss on July 17, arguing the borrower waived the claim and cannot hold its lender responsible for fraud allegedly committed inside the company.²² For asset-based and revenue-based desks, this is collateral monitoring becoming two-way litigation risk: the same field audits that protect a borrowing base are now being framed as duties the lender allegedly failed to perform.

The July Monthly Confidence Index for the $1.3 trillion equipment finance industry came in at 63.7, unchanged from June, but the flat headline hides genuinely opposing moves: executives reporting improved access to capital rose to 33.3 percent from 27.3 percent and hiring plans firmed, while those expecting business conditions to improve fell to 22.7 percent from 30.4 percent and the stay-the-same camp swelled to 72.7 percent from 65.5 percent.^{23 24} Expectations for capex financing demand eased to 28.6 percent from 31.8 percent, and the share seeing the US economy worsening over six months dropped by nearly half, to 13.6 percent from 25 percent.²³ The read for originators: the industry is converging on flat, not bracing for a downturn and not positioning for expansion, which usually means underwriting posture and pricing hold steady into the fall while everyone waits for a rate or demand signal to break the tie.

Oregon's Division of Financial Regulation has proposed a licensing bulletin that would sort Buy Now, Pay Later providers into the state's payday lending regime for products with terms of 60 days or less and into consumer finance licensing for longer terms, covering loans under $50,000 and reaching servicers, brokers, and facilitators, not just the lender of record.^{26 25} The American Fintech Council formally asked the division to adjust the proposal on July 20: it opposes applying payday-style licensing to BNPL, wants the state to clarify that merchant compensation is not a consumer finance charge, and is pressing for formal rulemaking rather than a bulletin, with CEO Phil Goldfeder arguing responsible BNPL providers "offer important financial options" for evolving consumer needs.^{27 25} This is consumer credit, but the mechanism deserves commercial attention: a bright-line 60-day term threshold that drops short-duration products into a high-cost licensing regime is exactly the kind of template that migrates between states, and between product categories, faster than the products can restructure around it.

_{Sources
1 American Banker | State AGs Sound Alarm Over Enova, OppFi Buying Banks
2 Banking Dive | State AGs Blow Whistle on OppFi, Enova Deals
3 Crain's Chicago Business | Raoul Urges Feds to Reject Enova, OppFi Bids for National Bank Charters
4 National Consumer Law Center | 64-Group Coalition Letter to the Federal Reserve on the Enova and OppFi Applications
5 Federal Reserve | Public Comments on the Enova Bank Holding Company Application (FOIA Release)
6 PR Newswire | Enova Announces Definitive Agreement to Acquire Grasshopper Bank, December 11, 2025
7 Beyond Banks | Enova-Grasshopper $369M Acquisition, December 16, 2025
8 PR Newswire | OppFi Announces Definitive Agreement to Acquire BNCCORP and BNC National Bank, April 29, 2026
9 PYMNTS | OppFi Moves Deeper Into Banking With $130 Million BNC Purchase
10 Consumer Finance Monitor | California Court Issues Final Statement of Decision Rejecting DFPI True Lender Theory Against OppFi
11 Banking Dive | California Judge Rules in Favor of OppFi, Against Regulator
12 Business Wire | OppFi Acquires Equity Interest in Bitty, Enters Small Business Financing Market
13 CFPB | Consumer Financial Protection Bureau Reaches Settlement With Enova International, January 2019
14 American Banker | CFPB Fines Enova $15M for Illegally Withdrawing Funds Without Consent
15 OCC | Conditional Approval No. 1333, SmartBiz and Centrust Bank, February 18, 2025
16 deBanked | More About OppFi's Big Equity Investment in Bitty
17 Banking Dive | Fintech SmartBiz Buys Illinois Bank
18 Beyond Banks | Klarna Joins Affirm, OneMain in FDIC Charter Queue, July 7, 2026
19 Brewbound | Uncle Nearest's Receiver Turns Fraud Narrative Back on Lender
20 The Spirits Business | Uncle Nearest Receiver Claims Lender Ignored Red Flags
21 CourtListener | Farm Credit Mid-America, PCA v. Uncle Nearest, Inc., No. 4:25-cv-00038 (E.D. Tenn.)
22 Moore County Observer | Farm Credit Rejects Claim It Ignored Warning Signs
23 Monitor Daily | Equipment Finance Industry Confidence Unchanged in July
24 Equipment Leasing & Finance Foundation | Monthly Confidence Index (MCI-EFI)
25 Crowdfund Insider | American Fintech Council Asks Oregon to Reconsider Proposed Rules for BNPL Providers
26 Oregon Division of Financial Regulation | Proposed BNPL Licensing Bulletin
27 American Fintech Council | AFC Urges Oregon Regulators to Adjust Proposed BNPL Licensing Framework, July 20, 2026
28 State Attorneys General | July 15, 2026 Letter to the OCC, Federal Reserve, and FDIC on Bank Charters for High-Cost Lenders (PDF)
29 State Attorneys General | July 6, 2026 Request for Public Hearing on the Enova International Application (PDF)}