The United States is facing a financial inclusion crisis, yet some advocacy groups are pushing to make it harder for new banks to enter the market—a move that defies logic, according to a new analysis.
Federal data from the FDIC's 2023 survey shows that 19 million households are underbanked, and another 5.6 million have no bank account at all. These are working families, small business owners, and consumers trying to rebuild credit, often hit by unexpected financial shocks. As fintechs and other nontraditional firms seek regulated bank charters, special interests are lobbying regulators to shut the door, a trend that has intensified in recent years.
The debate goes beyond any single company. Industry reports indicate a surge in charter interest, even as approvals remain contentious. Policymakers routinely call for more competition and innovation, but the current environment may be discouraging qualified entrants. The case of Enova International, an online lender seeking to acquire Grasshopper Bancorp and its national charter, illustrates the broader dynamic. Enova's application has drawn coordinated opposition from activists and politicians, echoing the Obama-era Operation Choke Point, which pressured banks to cut ties with lawful but disfavored businesses—a history that prompted President Trump's 2025 executive order on fair banking.
Reasonable people can disagree about Enova's products, but the core issue is whether charter decisions will be made based on law and evidence or on political campaigns. Today's target is Enova; tomorrow it could be any fintech, payments firm, or specialty lender. Once approvals become political contests, the damage extends far beyond one application.
Historically, a healthy banking system has depended on new entrants, fresh capital, and competition. New banks pressure incumbents, expand consumer choice, and serve customers legacy institutions often ignore. In most industries, such competition is welcomed—banking should not be an exception.
America now has too few institutions competing for working families. The Federal Reserve Bank of Richmond reports that more than 5,400 bank branches closed between 2019 and 2023, creating banking deserts. But the problem is deeper than branch counts: even consumers with checking accounts and apps may lack access to credit for car repairs, medical bills, or small business payroll. Eliminating a financial product does not eliminate the underlying financial need.
Special interest groups often measure success by the number of loans eliminated, while consumers measure success by whether their problems are solved. Research from the Federal Reserve Bank of New York shows that interest-rate caps reduced credit access for higher-risk borrowers without improving delinquency outcomes—leaving many worse off.
This does not mean every charter application should be approved. Bank charters are not favors; they are gateways into a heavily supervised sector. Applicants should face rigorous scrutiny of management, capitalization, compliance, and consumer protections. The Office of the Comptroller of the Currency exists to ensure that discipline—but rigor is incompatible with politicization.
Whether Enova wins approval or is rejected, the decision must rest on facts and the record, not on whichever group shouts loudest. As Washington debates government's role in emerging industries, the banking sector faces a similar test: will regulators protect competition and inclusion, or cave to political pressure? The stakes are high for millions of Americans who need more options, not fewer.
