Banks rally against Figure’s ‘precedent-shattering’ charter bid
- Run by former SoFi chief executive Mike Cagney, Figure has recently applied for a national bank charter
- Powerful lobby groups say the public has not been given enough information about Figure’s business plan
An influential group of trade bodies representing millions of US bankers has urged regulators to postpone consideration of Figure’s bank charter application.
In a letter dated 7 December to Louis Gittleman, director for district licensing at the Office of the Comptroller of the Currency, lobby groups including the American Bankers Association and Bank Policy Institute called for Figure’s application to be delayed to allow for a period of public consultation.
Figure is a blockchain-powered lender specialising in home equity lines and mortgage refinancing. The business was founded in 2018 by Mike Cagney, former co-founder of the student loans fintech firm SoFi. Figure raised $103m at a $1.2bn valuation in late 2019.
On 6 November 2020, Figure announced that it had applied for a national bank charter from the OCC. Cagney said in a statement that the move was about reducing complexity and helping underserved consumers.
Bank lobbyists, however, argue in their letter that “the precedent-shattering approach of granting a national bank charter to an institution that accepts only uninsured deposits would violate the federal law”.
The authors also claim that awarding a bank charter to Figure would carve “a new pathway to evade” existing regulation.
Another point laboured in the letter is that the public sections of Figure’s charter application do not give interested parties enough detail to properly scrutinise the company and its business plan.
“The lack of information in the public portion of the application about the key aspects of applicant’s business model and proposed operations raises significant process concerns, and granting this charter would represent a fundamental departure from existing policy by the OCC,” the lobbyists state.
Figure was contacted for comment.
The other organisations which lent their support to the letter were Credit Union National Association, Independent Community Bankers of America, National Association of Federally-Insured Credit Unions, The Clearing House and The Consumer Bankers Association.