OCC’s Curry Defends Special-Purpose Fintech Charters

By Jeff Bater

A federal regulator proposing to take charter applications from financial technology companies is defending the plan from critics, saying the agency is on strong legal ground.

Comptroller of the Currency Thomas Curry fielded questions from a moderator at a fintech conference March 1 on a proposal released in December to deal with innovation affecting the banking sector and the technological changes that have disrupted lending. Critics have questioned whether the agency has the authority to issue the charters.

“Some people questioned whether there was the underlying legal authority to charter a special-purpose national bank that was not insured by the FDIC [Federal Deposit Insurance Corporation]. We are very certain that is legally permissible,” Curry said.

The OCC has issued special-purpose charters in the past — to trust institutions and credit card banks, for instance. To qualify for a charter, an applicant has to engage in at least one of the core banking functions: receiving deposits, lending money or paying checks.

“We believe we are on a very strong legal ground,” Curry said.

National Bank

From a consumer protection standpoint, Curry said he thinks some people misconstrue that “when you’re talking about a special-purpose national bank that’s fintech related, you’re talking about a national bank.”

“So the whole panoply of supervision and regulation comes along with it,” he said. “Obviously, we’re going to tailor our supervision to the nature of the business. But it’s not going to be a necessarily light-touch regulation.”

Maria Vullo, superintendent of New York’s Department of Financial Services, said in a Jan. 18 speech in Washington that the OCC lacks the legal authority or experience to regulate nonbank fintech firms via its proposed national charter.

Sens. Sherrod Brown (D-Ohio) and Jeff Merkley (D-Ore). said in a Jan. 9 letter to Curry that offering a new charter to nonbank companies “seems at odds with the goals of financial stability.” They wrote that allowing an alternative charter for companies that want to provide only one type of banking service may undermine full-service banking and decrease access to low-cost checking and savings accounts.

Curry told the conference March 1 that the reason for the agency’s interest in fintech and responsible innovation is that it can serve as “an invaluable means” to expand access to financial services to the underbanked or those outside the mainstream.

To contact the reporter on this story: Jeff Bater in New York at jbater@bna.com

To contact the editor on this story: Seth Stern at SStern@bna.com

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