NAFCU, CUNA, Others Challenge OCC's Special Bank Charter Idea

As the Office of the Comptroller of the Currency considers a special purpose bank charter limited to payment services, NAFCU, CUNA, the American Bankers Association and other financial trade organizations have been pushing back.

In a letter to the OCC this week, NAFCU Senior Counsel for Research and Policy Andrew Morris said the OCC “should not give preference to fintech as a new model of banking ready to replace traditional institutions, but rather seek to modernize traditional supervisory frameworks.”

In all, the trade organizations are attempting to argue that any changes in bank charters, even when narrowly focused on fintech firms, should be subject to the same regulations as financial institutions like banks and credit unions, and that consumers should benefit from the same protections.

CUNA Senior Director of Advocacy and Senior Counsel for Payments and Cybersecurity Lance Noggle wrote to the OCC on Monday, “Similar to many other industries, depository institutions’ business models are impacted by technology and innovation from within and outside the industry, as well as regulatory constraints. Nonetheless, any change to a Federal banking charter shouldn’t happen behind closed doors and must only be considered in an open and transparent process.”

The combined letter from several financial trade organizations to the OCC raised specific concerns about the risks involved in the OCC’s consideration. “We have serious concerns around the recent discussion of a narrow-purpose payments charter. These charters could introduce serious risks that would undermine the valuable role that national banks play in our dynamic economy. We believe that a payments-focused charter introduces serious unintended consequences.”

While Morris argued that the OCC’s current national bank charter appeared to meet the intent of more specialized charters, he took a more dire tone with OCC officials. “However, plans to extend these privileges to nonbanks with narrower business interests and reduced supervisory oversight could invite excessive risk taking. It could also dilute the strength of the overall banking system by making it harder for consumers to access safe, convenient and affordable solutions to meet their financial needs in one place.”

CUNA, NAFCU and other organizations agreed that the OCC’s discussion was necessary as consumers are moving to and using more mobile-only financial products and services. They also all agreed that the OCC conduct these potential changes in public in a “full and transparent rulemaking process.”