Democrats applauded when the Supreme Court reaffirmed the Federal Reserve Board’s independence to conduct monetary policy by blocking President Trump’s efforts to remove Gov. Lisa Cook this summer. Yet Democrats are happily working to politicize the central bank’s other primary task: supervisory oversight of bank holding companies. While monetary policy has long been a political football, decisions about regulatory supervision and mergers have largely remained technocratic and apolitical.
Beginning this summer, 20 Democratic state attorneys general and a mass of left-wing consumer activists have worked to politicize this process by pressuring the Fed to reject charter applications from innovative providers. Early in September those efforts claimed their first scalp, as fintech lender Enova International abandoned its effort to obtain a national bank charter by merging with Grasshopper Bank.
Though it was a relatively small deal, the merger’s collapse should serve as a serious warning to Fed Chairman Kevin Warsh and Comptroller of the Currency Jonathan Gould. They must update and clarify federal regulators’ standards for reviewing bank mergers to account for innovative fintech providers and others. Otherwise the political meddling is likely to worsen—to the detriment of everyday Americans.
Enova’s pairing with Grasshopper was a natural and innovative acquisition that would have improved consumer choice. Enova is a fast-growing fintech platform with about $7.2 billion in total assets. Grasshopper is a digital-only bank founded in 2019. Authorizing Enova to obtain a charter would address a long-festering problem: a paucity of choices for lower-income and subprime consumers within the regulated bank system.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing