State Banking Officials Sue OCC to Stop Fintech Charters

State officials file suit following announcements from the comptroller’s office that it planned to issue fintech charters.

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Office of the Comptroller of the Currency.

The Conference of State Bank Supervisors has asked a federal judge to prohibit the Office of the Comptroller of the Currency from issuing “special purpose” charters to fintech companies.

In a suit filed Thursday in the U.S. District Court for the District of Columbia, the state officials said that the OCC does not have the authority to issue such charters. In addition, they said that the OCC plan would usurp state laws governing non-bank financial companies.

In March 2017, then-Comptroller Thomas Curry announced that the OCC would issue charters to fintech companies. When Curry’s term expired, Acting Comptroller Keith Norieka reaffirmed that commitment.

This summer, the Treasury Department issued a report containing recommendations on how to deal with emerging technology in the financial industry. That report included a recommendation that the OCC issue fintech charters.

A day later, Comptroller Joseph Otting said his agency would do so.

The state officials contend that Otting does not have the power to do that under the National Bank Act.

“By creating a national bank charter for nonbank companies like fintech firms, the OCC has gone far beyond the limited authority granted to it by Congress under the NBA and other federal banking laws,” the state officials said in their suit.

“Yet the OCC has, through its latest effort, created without express statutory authorization a new type of charter for nonbank companies that would neither carry on the business of banking (because chartered companies would not be engaged in deposit-taking), nor any expressly authorized special purpose,” they continued.

The state officials had filed suit following the announcements from the comptroller’s office that it planned to issue fintech charters, However, U.S. District Judge Dabney L. Friedrich dismissed that suit, saying it was too speculative.

The state officials said that since the OCC has said that fintech charters may be imminent, the suit no longer is speculative.