Attorney General Bonta Sounds the Alarm on Tactics from Predatory Lenders to Evade State Consumer Protection Laws, Alerts Federal Financial Regulators

July 15, 2026 Contact: (916) 210-6000, agpressoffice@doj.ca.gov OAKLAND — California Attorney General Rob Bonta has sent two letters to financial regulators sounding the alarm over attempts by predatory nonbank lenders to circumvent state laws by forming sham partnerships with national banks — or attempting to become national banks themselves. In a letter sent today, Attorney General Bonta and a coalition of 20 attorneys general call on the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve (FRB), and Federal Deposit Insurance Corporation (FDIC) to prevent predatory lenders from engaging in these actions in order to bypass state consumer protections. In a second letter sent recently, Attorney General Bonta and a coalition of 15 states call on the FRB to hold a hearing regarding the application of Enova International (Enova), a predatory, high-cost lender, to acquire Grasshopper Bank given concerns that the transaction is intended to allow Enova to evade state lending laws.  “California and many of our sister states have strong consumer protection laws that protect our residents — especially financially vulnerable consumers — from being taken advantage of by predatory lenders. Now, some of these nonbank lenders are seeking to exploit federal banking charters in an attempt to bypass state limits on high-cost, predatory lending,” said Attorney General Bonta. “Today, I urge federal financial regulators not to extend bank privileges to predatory nonbanks whose risky practices threaten both consumers and the stability of the financial system. Allowing such companies into the national banking system without guardrails needlessly leaves consumers vulnerable to harm. Especially amid a crisis of affordability, the federal government must work to ensure that Americans are protected financially.”  BACKGROUND Nonbank financial services providers are part of a fast-growing consumer financial marketplace that has increasingly provided bank-like services while operating without a bank charter. Nonbanks were at the center of the 2008 financial crisis, and the comparative lack of regulation and transparency in this sector can put consumers and the financial system at risk. Allowing these institutions to make risky loans while protected from state lending laws by federal charters would threaten both consumers and the stability of the economy as a whole. Predatory nonbank lenders have increasingly sought to use national bank preemption to in an effort to evade state consumer financial protection laws, including laws that cap interest rates on consumer loans. In some of these schemes, the bank acts as a mere pass-through, transferring funds to borrowers as instructed by the nonbank and then "selling" the loan back to the nonbank lender. The bank never has a true financial stake in the loan, and is therefore not the true lender, but this purported loophole leaves borrowers with exorbitant interest rates that are illegal under California law. In California, for example, where interest rates are capped at 36% for consumer loans between $2,500 and $10,000, predatory lenders have attempted to partner with banks to “rent out” the bank charter and charge an interest rate of 100% or higher.  THE LETTERS In the letter sent today to the OCC, FDIC, and FRB the attorneys general raise concerns about the rise in predatory, high-cost, nonbank lenders seeking to become national banks and urge the regulators not to allow these partnerships, as they erode state autonomy and consumer protections, can cause irreparable consumer harm, and threaten the stability of the financial system. Enabling these entities to become national banks allows them to evade interest rate caps, impose outrageous rates, and expand their ability to target financially vulnerable borrowers. The loans and other products offered by these nonbank financial institutions are much riskier than those offered by traditional banks and granting these institutions federal charters can thereby threaten the stability of the financial marketplace. In the letter sent recently to the FRB, the attorneys general specifically call out an application by Enova to acquire Grasshopper Bank, a federally chartered bank. Enova is a nonbank lender that offers high-cost loans to consumers and small businesses under trade names including CashNetUSA and Net Credit. These high-cost loans can carry APRs in the triple digits, carry a significant risk of default, and trap consumers in a cycle of debt. For example, one Enova website provides an example of a $600 loan repaid with biweekly $100 payments over nearly 8 months, resulting in more than $1,400 repaid and an APR of nearly 300%. Consumers who are unable to pay their loans may face harassment, lawsuits, and wage garnishment, among other hardships. Enova is currently prohibited from offering its predatory loans in many states with limits on high-cost lending, which limit the spread of such harmful products,