Washington is locked in a high-stakes duel over the future of American banking. On July 21, leaders of the House Financial Services Committee—including Chairman French Hill and Subcommittee Chairman Andy Barr—pressed the Federal Reserve to end bureaucracy and expedite bank acquisition reviews. In opposition, activists are weaponizing regulatory “adverse comments” to block non-traditional lenders from securing bank charters. Meanwhile, the real victims are the 19 million underbanked American households left with fewer choices and tighter credit.
The latest target is Enova International, an online lender serving consumers and small businesses, including borrowers who often fall outside traditional underwriting models. Enova seeks to acquire Grasshopper Bancorp and its subsidiary, Grasshopper Bank, in a roughly $369 million transaction. Grasshopper already has a national bank charter. After the transaction, Enova would become a Federal Reserve-regulated bank holding company and Grasshopper would retain its OCC-regulated national charter. Enova is asking permission to move deeper into regulatory territory.
Isn’t that a good thing?
Sens. Elizabeth Warren and Chris Van Hollen urged regulators to reject the transaction. A coalition of 20 state attorneys general warned federal banking regulators against allowing high-cost nonbank lenders to use national banks, while a separate coalition of 15 states demanded a Federal Reserve hearing specifically on Enova’s acquisition. Their objection is hardly disguised: A national bank can operate under federal banking law and export interest rates across state lines, frustrating state politicians who would rather decide which credit products consumers may use.
Reasonable people can disagree about Enova’s products. Regulators, however, answer to a higher authority. They should do what regulators do best: regulate. What they are not supposed to do is transform an application under federal banking law into a national referendum on whether Elizabeth Warren, 20 attorneys general or a collection of advocacy groups approves of the applicant’s APRs. A senator’s dislike of a lending product is not a prudential standard.
Federal law tells the Federal Reserve what to examine in a bank acquisition: competition, financial condition, managerial resources, future prospects, compliance, financial stability, and the convenience and needs of the communities served. Those standards exist for a reason. Regulators are supposed to determine whether an institution can operate safely and lawfully. Period. Full stop.
Conversely, Operation Choke Point notoriously used regulatory pressure to push banks away from lawful but politically disfavored businesses. President Trump’s 2025 fair-banking order specifically cited that episode and declared that banking decisions should rest on “individualized, objective, and risk-based analyses.” That principle is sound. Regulators should not keep a qualified banking applicant out of banking for the same reason.
The fact remains that America has a shortage of banks. Following the Great Recession and the COVID-19 pandemic, the system became more concentrated while thousands of communities lost physical access to banking. The Federal Reserve Bank of Richmond found that the United States lost more than 5,400 bank branches between 2019 and 2023, contributing to the growth of banking deserts. At the same time, new-bank formation collapsed. Comptroller of the Currency Jonathan Gould testified that from 1990 through 2008, the OCC received and approved more than 1,000 de novo charter applications. After 2008, applications and approvals fell by roughly 90%, while the number of banks with less than $1 billion in assets was cut in half.
Research from the Federal Reserve Bank of New York illustrates the problem. Economists examined states that imposed 36% rate caps and found that credit balances for the riskiest borrowers fell substantially after the caps took effect. Five quarters later, balances among the highest-risk borrowers were about $2,000 lower relative to comparable borrowers in states without price controls. Maybe that sounds like victory to a regulator counting fewer loans. There was one inconvenient detail: Delinquencies among those borrowers did not improve. They simply had less credit.
None of this means Enova deserves a bank. The company should be required to satisfy every applicable requirement governing capital, management, compliance, consumer protection, safety and soundness, community needs and financial stability. If it cannot, the transaction ought to be rejected. “We do not like the loans you make” is something else entirely.
Congress created a national banking system precisely because banks cannot operate as 50 separate institutions subject to 50 politicians’ preferred versions of credit policy. If lawmakers want to rewrite federal preemption, impose a national rate cap or prohibit certain lending products, they have a legislature for that.
America needs more competition, more innovation, and more institutions willing to serve borrowers who do not fit neatly inside traditional credit boxes. After years of consolidation and historically weak new-bank formation, erecting another political barrier to entry would be backward. A rigorous chartering and acquisition process protects the banking system. A political one protects incumbents and activists. Regulators should know the difference.
