Maryland Attorney General Joins National Coalition to Block High-Interest Lender Merger

Maryland Attorney General Anthony G. Brown has joined a coalition of 17 state attorneys general in urging federal regulators to reject a proposed merger that would allow Opportunity Financial, LLC (OppFi) to obtain a national bank charter. The coalition expressed concerns that this move would enable OppFi to bypass state laws and offer loans with exceptionally high interest rates nationwide, potentially harming consumers.

OppFi, an online lender, primarily serves individuals with poor credit histories or financial difficulties, offering installment loans that can carry annual percentage rates (APRs) nearing 200%. While the company promotes its loans as a financial lifeline, the attorneys general argue that the exorbitant interest rates frequently lead borrowers to default or refinance due to an inability to repay. This practice, they contend, can trap consumers in a cycle of debt.

The core of the coalition’s objection lies in OppFi’s attempt to acquire BNC National Bank. This acquisition would grant OppFi a national bank charter, which, under federal law, allows national banks to charge the highest interest rate permitted in their home state. The coalition fears this would effectively permit OppFi to export rates from states with lenient usury laws across the country, overriding the consumer protection statutes of states like Maryland, which have stricter limits on interest rates for loans. For instance, in Maryland, it is illegal to charge more than 33% APR on loans under $2,000.

Previously, OppFi has utilized “rent-a-bank” arrangements, partnering with state-chartered banks in states without strict interest rate caps. These partnerships allow OppFi to export higher interest rates to borrowers in other states. However, these arrangements have faced legal challenges, and Maryland’s Credit Services Business Act, for example, prohibits non-bank lenders from facilitating loans that would be considered usurious in the state. The proposed merger would eliminate the need for such partnerships and provide OppFi with direct access to a national bank charter, allowing it to operate more freely and with less state oversight.

The coalition of attorneys general, including those from Arizona, California, Connecticut, the District of Columbia, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Washington, have written to the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB). They argue that granting OppFi a national bank charter would not only lead to a significant increase in unaffordable, high-cost loans but also pose risks to the stability of small businesses and the broader banking system. They believe that allowing this merger would set a dangerous precedent, potentially allowing other high-cost lenders to circumvent state consumer protections through federal preemption.

The primary concern for residents is that if this merger is approved, it could lead to an increase in the availability of extremely high-interest loans across the country, making it harder for consumers, especially those in vulnerable financial situations, to access credit responsibly. States would have limited recourse to enforce their existing consumer protection laws against such lenders operating under a national bank charter.

Article by Mel Anara, based upon information from the Maryland Attorney General’s Office.

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