Congress created the Federal Deposit Insurance Corp. during the Great Depression to protect Americans’ hard-earned money and restore confidence in the financial system. Today the FDIC regulates more than 5,000 banks for safety and soundness, resolves failed banks, and provides standard deposit insurance on individual accounts up to $250,000. As if that isn’t enough, its current leadership is attempting to expand its authority to target banks that work with financial-technology companies. The FDIC increasingly wants discretion in deciding where and under what circumstances consumers can obtain loans, financial products and other banking services. Arrogating such power to itself disregards the rule of law, innovation and consumer choice.

Financial-technology companies, or fintechs, are at the forefront of innovation in financial services. Consider Opendoor, which offers a new mobile-device platform to buy and sell homes with a cash offer. Whether such fintechs as Opendoor have built a better mousetrap should be a question for the public, not the government. Yet Washington bureaucrats typically don’t welcome innovators, whose companies threaten their power.

This dynamic doubtless obtains with the FDIC. The fintech business model relies on collaboration with enterprising banks. The FDIC’s hostility toward such banks is laid bare by the agency’s enforcement statistics. Since January 2023, according to the Klaros Group, more than 25% of the FDIC’s formal enforcement actions against institutions have targeted banks with fintech partnerships—though they represent a much smaller percentage of all banks in the U.S.

Earlier this year it forced Lineage Bank of Franklin, Tenn., to terminate all “significant” partnerships with fintechs. The FDIC also determined that New York’s Piermont Bank must get written approval from its board before adding new fintech partners. The message is clear: Any bank that goes into business with a fintech company will face the regulatory gauntlet.

It’s difficult to read these statistics and conclude that the FDIC isn’t trying to bully banks through consent orders and “cease and desist” demands. In doing so, the FDIC is engaged in de facto rulemaking while bypassing the notice and public comment period legally required under the Administrative Procedure Act.

The FDIC’s assault on fintech isn’t confined to enforcement. The agency in April took the unusual step of submitting a friend-of-the-court brief in a case interpreting Colorado state law. Fintech trade groups have sued Colorado over a law, set to take effect in July, that they say would reduce competition by capping interest rates on loans made by state-chartered banks based in the 49 other states. The law would hit banks with fintech partnerships especially hard because it targets products unique to their firms, such as short-term credit and buy-now-pay-later loans.

Leading the anti-fintech charge is FDIC Chairman Martin Gruenberg, who hasn’t tried to conceal his contempt for the industry. In a recent speech, he referred to fintech firms as “shadow banks” while claiming that nonbank lenders fueled the 2008 financial crisis.

The agency’s actions are déjà vu. During Mr. Gruenberg’s stint leading the agency during the Obama administration, the FDIC joined the Justice Department in a program called Operation Choke Point. The agencies’ goal was to deny banking services to businesses they deemed undesirable, such as payday lenders, gun manufacturers and independent ATM operators. Congress never authorized such action, meaning that unelected and unaccountable bureaucrats effectively put their thumbs on the scale to say with whom banks could—and couldn’t—do business.

After significant pushback, the FDIC and Justice Department claimed to have abandoned the program in August 2017. Considering the damage it did to their institutional reputations, one would think the FDIC wouldn’t try a similar scheme again. If only.

Mr. Gruenberg hasn’t enjoyed smooth sailing since returning to his post. The Journal revealed in a series of articles last fall that the agency has a toxic workplace, with widespread allegations of harassment, discrimination and other offenses. Members of the House Financial Services Committee in November launched an inquiry to evaluate the claims. On Tuesday an audit from the law firm Cleary Gottlieb Steen & Hamilton, commissioned by the FDIC, revealed that more than 500 people—mostly current employees—had reported “experiences of sexual harassment, discrimination, and other interpersonal misconduct” to the firm’s hotline.

It isn’t implausible that Mr. Gruenberg might be seeking to distract from the agency’s scandals by announcing a slew of enforcement actions that please the far-left elements of the Democratic Party. He could use some allies in Congress. Sen. Sherrod Brown (D., Ohio), chairman of the Banking Committee, has been one of the loudest critics of fintechs, accusing the companies of putting “people’s hard-earned money at risk” by acting like banks without offering the same level of “consumer protections and safeguards.”

Regardless of the motivation, the FDIC’s assault on fintechs is part of an alarming trend from the Biden administration. Whether it be the Federal Communication Commission’s imposing net neutrality on broadband providers, the Consumer Financial Protection Bureau’s imposing price caps on bank fees, or the Federal Trade Commission’s banning almost every noncompete agreement in America, government agencies are granting themselves sweeping discretionary powers in constitutionally dubious ways. In so doing, they threaten the rule of law, suppress economic growth and limit consumer choice. That should worry all Americans.