SOUTH
BRONX/EDNY, Sept 10
– The
Federal Reserve and OCC are entertaining
applications by Enova, the parent of high
cost lender CashNetUSA, to acquire
Grasshopper Bank, already deeply engaged
in AI banking.
Inner City
Press requested documents including the
Federal Reserve's communications with
Enova, under the Freedom of
Information Act. The Fed denied
the request, then on Inner City
Press' appeal provided
entirely redacted pages and a denial, which said if
you don't agree, you
can sue.
Inner City Press
did. On
July 8, the Court
set an initial
pretrial conference
for September 10,
2026 at 9:30 am. At
the time, Inner City
Press asked
that the eight
fully redacted
pages be
provided to
the Judge for
in camera
review. That
was ordered -
and then the
Assistant US
Attorney asked
to be able to
brief why the
Fed should NOT
have to show
the pages,
even to the Judge.
That filing is
due at on
September 10,
or now it
appears the
11th. Then
another two weeks.
Will the Fed, while
making this
argument, haul
off and rubber-stamp
Enova's
application? The
order:
"By
September 11,
2026, the
Government
shall file a
letter
regarding the
propriety of
the Court’s
requesting
submission of
the fully
unredacted
document at
issue for in
camera review
at the time
the Government
files its
opening letter
brief. Any
response from
Plaintiff
shall be filed
by Tuesday,
September 15,
2026. 2. By
September 24,
2026, the
Government
shall file a
letter brief
of no more
than 5 pages
(excluding
exhibits and
declarations)
providing its
arguments
against
disclosure. 3.
Plaintiff
shall file his
opposing
letter brief
of no more
than 5 pages
(excluding
exhibits and
declarations)
by October 8,
2026
(Plaintiff may
of course file
his opposition
any time
before that
deadline). 4.
Any reply
shall be filed
by the
Government
within 7
calendar days
from the day
Plaintiff
files his
opposition
brief."
Watch
this site.
On
September
2, after
several rounds
of meet-and-confer,
Inner City
Press and the
Assistant US
Attorney submitted
a joint letter,
here.
Inner City
Press has
requested that
the hearing be
in-person in
500 Pearl
Street, and has
noted that the
Federal Reserve
failure to
represent
itself is
leading to additional
delay on the
February 2026
FOIA request
about the
Fed's
questions to Enova, 8 pages redacted
in full now in
the record, here.
Watch this
site.
And on
July 6, the
Attorneys General of
New York,
California,
Colorado,
Connecticut,
Illinois, Maine,
Maryland,
Massachusetts,
Minnesota, Nevada,
New Jersey, North
Carolina, Oregon and
Vermont, along with
the Hawaii Office of
Consumer Protection,
wrote to the Fed's
Benjamin McDonough
demanding a public
hearing and urging
denial absent
assurances that
Enova's application
"is not merely an
effort to evade"
state usury laws.
Enova's CashNetUSA
and NetCredit loans
run to APRs above
200% — Enova's own
example being a $600
loan repaid at
nearly 300% APR —
with charge-off
rates over 50%.
Congress overturned
the OCC's "true
lender" rule
precisely to stop
nonbanks from
evading state usury
caps through bank
partnerships. And
Enova proposes to
move Grasshopper's
headquarters from
New York, whose
usury limits bind
it, to Utah, which
has none. In the
AGs' words, Enova
"seeks to evade
Congress and
circumvent state
limits on high-cost
or usurious
lending."
Inner City
Press / Fair Finance
Watch on July 8
filed a supplemental
comment to the Fed
tying the threads
together: the very
concerns fifteen
states' chief law
enforcement officers
raise —
charter-based
evasion, the Utah
move, 50%-plus
charge-offs funded
by insured deposits
— are presumably the
subjects of the
Fed's additional
information letters
to Enova. The
letters the Fed has
redacted in their
entirety, down to
its own questions. "In
this context, the
application should
not be acted on
other than denial.
And, again, the
Additional
Information letter
should be
released. This is
especially true
given the new
letter by state
Attorneys General.
The Fed should
consider that
letter - and this
one."
Among
with the denial, the
Fed sent Inner City
Press entirely
redacted pages from
its Additional
Information letter
to Enova, which we
put on our
DocumentCloud here
Inner
City Press has now
filed a FOIA
lawsuit against
the Fed for its
communications
with Enova - copy
of complaint,
which went live
on PACER on June
1, on now on
CourtListener,
here.
After the
Fed had been
mailed the complaint,
and its lawyers
told about it by
email, on June 6
Grasshopper Bank
filed to
remove to SDNY
a case filed
against it by
its former
Compliance
Officer, who
alleged
discrimination
including
false charges
of
having "taken
an extended
trip to Egypt," and said it
was untrue.
And
discriminatory.
The case is
26-cv-4795;
the FOIA case
is 26-cv-4556:
Lee v.
Board of
Governors of
the Federal
Reserve
System,
1:26-cv-04556
(Torres /
Lehrburger)
