The dangerous politicization of bank charters

The U.S. has a financial inclusion crisis. Some special interest groups want to solve it by making it harder to start a bank. That makes no sense.

Millions of Americans remain underserved by traditional banks. According to the 2023 FDIC National Survey, 19 million households are underbanked, and another 5.6 million are entirely outside the banking system. These are hard-working families, small-business owners, consumers rebuilding credit, and households trying to navigate unexpected expenses in an economy where financial shocks arrive with little warning. As new firms are seeking entry into the regulated banking system, special interest groups are urging regulators to slam the door shut.

That debate is larger than any one company.

Across the country, fintechs and other nontraditional financial firms are exploring bank charters and other supervised pathways to enter the regulated financial system. Industry reporting shows that interest in chartering has increased substantially in recent years, even as approvals remain difficult and contentious. Policymakers regularly call for greater competition, innovation and financial inclusion; to answer that call, America should be asking how to encourage qualified new entrants into banking.

The public comments about Enova International’s charter application provide a useful example of the broader trend. Enova, an online lender serving consumers who often fall outside traditional underwriting models, is seeking to acquire Grasshopper Bancorp, which includes its national charter. This transaction would place Enova inside the highly regulated banking system through bank ownership. In response, activist organizations and politicians have launched coordinated efforts urging regulators to block the deal.

The pattern recalls Operation Choke Point, during which Obama-era regulators leaned on banks to cut ties with lawful........

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