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Mike Cagney is testing the boundaries of the banking system for himself — and others

Founder Mike Cagney is always pushing the envelope, and investors love him for it. Not long sexual harassment allegations prompted him to leave SoFi, the personal finance company that he cofounded in 2011, he raised $50 million for new lending startup called Figure that has since raised at least $225 million from investors and was valued a year ago at $1.2 billion.
Now, Cagney is trying to do something unprecedented with Figure, which says it uses a blockchain to more quickly facilitate home equity, mortgage refinance, and student and personal loan approvals. The company has applied for a national bank charter in the U.S., wherein it would not take FDIC-insured deposits but it could take uninsured deposits of over $250,000 from accredited investors.
Why does it matter? The approach, as American Banker explains it, would bring regulatory benefits. As it reported earlier this week, “Because Figure Bank would not hold insured deposits, it would not be subject to the FDIC’s oversight. Similarly, the absence of insured deposits would prevent oversight by the Fed under the Bank Holding Company Act. That law imposes restrictions on non-banking activities and is widely thought to be a deal-breaker for tech companies where banking would be a sidelight.”
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