Regulation

Acting OCC Head Defends Banking Charters For Online Lenders

Keith Noreika, the temporary head of the Office of Comptroller since May, is defending an idea that first came up under his predecessor Tom Curry: offering online lenders and FinTech startups banking charters.  Noreika notes that the initiative will be good for making the United States’ banking system more flexible and responsive.

The OCC has been critiqued pretty heavily by state regulators since the proposal first surfaced a year ago.

But the new administration is looking to lower the regulatory burden that banks and FIs face — and opening up the banking world to FinTech innovators is one of the few areas of common ground between President Donald Trump’s  appointee Noreika and the Obama appointee he replaced.

Noreika’s comments also made clear that the OCC initiative exploring special FinTech charters did not go away even though the previous administration did.

“Quite simply, I think it is a good idea that deserves the thorough analysis and the careful consideration we are giving it,” he said in prepared remarks.

The OCC announced it was exploring granting special-purpose charters to FinTech companies in December.

The acting head of the OCC also noted they have begun meeting with FinTech players seeking a national charter. As of now there are no specific requests from non-depository institutions — but the OCC seeks to be prepared in advance, particularly since it is facing two lawsuits to stop said charters from ever coming into existence.

Both a nationwide organization of bank supervisors and New York State’s banking regulator have gone to court to argue that the OCC does not have the statutory authority to grant special national banking charters — and that allowing them to do so could push interest rates up and make it easy for a class of FIs to skip out on financial regulation.

Noreika has responded that the OCC has clear regulatory authority to grant bank charters to non-depository FinTech companies, and that nothing the OCC is doing should make it any easier to skip out of regulation.

“The agency is developing its litigation response and plans to defend this authority vigorously,” he said. “Where large-scale, short-term, consumer lending abuse occurs today, it does so through state-licensed and state-regulated companies, not national banks or federal savings associations,” he asserted.

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