The Conference of Bank State Supervisors (CSBS), an organization and advocate for the legislative and regulatory interests of state banking, has just filed suit against the Office of the Comptroller of the Currency (OCC) in response to the latter’s plans to offer banking charters to FinTechs.
The OCC’s plans, first announced late last year, have led to an ongoing dispute between states and the federal agencies.
Now, CSBS alleges in the suit, filed in the U.S. District Court of Columbia, that the OCC is overreaching its authority by extending charter status to non-banks.
“If the OCC is allowed to proceed with the creation of a special purpose non-bank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority,” CSBS President and CEO John Ryan was quoted as saying in a press release. “We are confident that we will prevail on the merits.”
Comptroller of the Currency Thomas Curry had in the past defended against charges by banking trade bodies and state regulators that the OCC’s plans overextend its power.
At a conference in March, Curry told an audience, “To be clear, the National Bank Act does give the OCC the legal authority to grant national bank charters to companies engaged in the business of banking. That authority includes granting charters to companies that limit their business models to certain aspects of banking, and it is not circumscribed just because a company delivers banking services in new ways with innovative technology.”
Beyond the issue of the overextension of power, CSBS has argued that extending banking charter status to FinTechs harms markets and innovation and puts taxpayers at risk as the result of potential FinTech failures.
“This is a dangerous combination and one the court should decisively halt,” CSBS’s John Ryan said in the release. “To protect consumers and taxpayers, to promote innovation and to ensure fair and open competition, CSBS was forced to take legal action against the OCC charter.”
For FinTech firms, the move toward charters on the federal level is a bit of a regulatory advantage since they don’t need to register to do business or satisfy laws and regulations on a state-by-state basis.