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Trump Wants to Create More Banks. Many Firms Are Heeding His Call. Urged on by the White House and a reduction in regulatory oversight, crypto companies and automakers are among those that have applied for banking charters. Paul Gu, the chief executive of Upstart, an online lender seeking a bank charter. “It was just a natural next step for us,” Mr. Gu said. Kim Raff for The New York Times
Crypto companies and financial technology upstarts have long cast themselves as challengers to traditional banks. But now, many are seeking licenses to enter the very industry they once sought to upend: That is, they want to become banks. Dozens of financial firms — established industry veterans and nascent start-ups — have applied for banking charters. The list includes the payments behemoth PayPal; the “buy now, pay later” pioneer Affirm; all of Detroit’s Big Three automakers; World Liberty Financial, which is linked to the Trump family; and a wave of other cryptocurrency brokers and merchants. The firms are taking advantage of Trump administration policies aimed at creating more banks, after a lengthy period during which the number of new entrants stalled. The banking charters would allow the firms to have more control over the loans they initiate and the assets they can hold. Without a charter, some of the firms have had to rely on third parties to extend credit, which complicates their decision-making and reduces profits. These charters come with other major perks — most notably, for national charters, a federal pre-emption that overrides many state-specific consumer protection laws like interest-rate caps. Banking remains one of America’s most heavily regulated industries because of the power such institutions hold over consumers, businesses and the nation’s economy. We are having trouble retrieving the article content. Please enable JavaScript in your browser settings. Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times. Thank you for your patience while we verify access. Want all of The Times? Subscribe.