Banking

Oportun pulls bank charter application, states it prepares to refile

The Silicon Valley customer lending institution Oportun has actually withdrawn its application for a bank charter almost a year after sending its quote to the Office of the Comptroller of the Currency.

The choice followed 22 federal and state customer advocacy groups composed to acting Comptroller Michael Hsu on Aug. 4, asking the firm to postpone any choice on the application till the Consumer Financial Protection Bureau finished an examination into the business’s financial obligation collection practices.

Oportun stated that it’s preparing to modify components of its application to show modifications in its company. Last year, the business revealed a collaboration with MetaBank in Sioux Falls, South Dakota, which has actually enabled it to run in 33 states, up from 12 states when it initially looked for a charter.

Oportun Financial, led by CEO Raul Vazquez, had actually prepared to utilize a bank charter to use monitoring and cost savings accounts, certificates of deposits and, ultimately, different customer loan items.

Stefanie Herzer

“We have forged a constructive relationship with the OCC since filing our initial application nearly a year ago,” Oportun stated in a declaration Friday. “We remain committed to pursuing a bank charter with the OCC … .“

The OCC declined to comment.

Though it is backed by Silicon Valley venture capitalists, the San Carlos, California-based company differs from other online lenders because it offers loans to lower-income borrowers and those with thin credit histories through brick-and-mortar locations as well as online.

Oportun, which has been led since 2012 by CEO Raul Vazquez, had planned to use a national bank charter to offer checking and savings accounts, certificates of deposit and, eventually, personal installment loans, credit cards and auto financing.

A source familiar with Oportun’s application said that “it is not uncommon for companies, including fintechs like SoFi and Varo, to withdraw their initial applications before ultimately resubmitting and being granted banking charters.”

Reports in 2015 by ProPublica and The Guardian raised problems about the price of the loans Oportun was providing, along with about the a great deal of financial obligation collection claims the business had actually submitted and the speed with which it was taking customers to court over past-due financial obligation.

Advocacy groups, consisting of the Center for Responsible Lending, the National Consumer Law Center and the League of United Latin American Citizens, raised issues in their letter to Hsu that the business’s financial obligation collection practices might damage citizenship applications for Latino immigrants.

“Oportun has weaponized the legal system as their debt collector with zero regard to the impact on the Latino community that they purport to serve,” the groups stated in the letter.

Oportun revealed modifications to its financial obligation collection practices in July 2020, around the time that ProPublica released its very first short article, which the business stated would lead to less cases.

Apart from opposing Oportun’s charter application, advocacy groups likewise desire the OCC to stop Oportun from “renting out” MetaBank’s charter.

“Oportun’s partnership with MetaBank would allow Oportun to expand its reach to consumers across the country and make loans not permitted for nonbanks under the laws of certain states, even despite Oportun’s not receiving the bank charter it sought,” the groups stated in the declaration Friday.

Oportun’s choice to withdraw its application is a sign that the OCC is taking a harder position on brand-new charters throughout the Biden administration than it performed in the Trump period. Oportun sent its application when the OCC was being led on an acting basis by Brian Brooks, who was warmer to nonbanks getting bank charters.

Since taking control of as acting comptroller in May, Hsu has taken a more mindful tone towards authorizing applications from nonbanks, consisting of fintechs.

Last month, President Biden chosen Saule Omarova, a law teacher at Cornell University and previous Treasury consultant, to end up being comptroller. Banking groups have actually lined up versus her election.

Last year, Omarova spoke with American Banker about the concern of whether fintechs must deal with stiffer obstacles to getting bank charters. She stated it was time to “assess the systemic importance of not just chartering banks, but the systemic importance of regulating banks and understanding what it is that banks do.”

This story has actually been upgraded to consist of extra remarks from advocacy groups.



Gabriel

A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

Related Articles

Back to top button

Adblock Detected

Please turn off the Adblocker