CSBS challenges OCC’s pending fintech charter

State Issues CSBS OCC Fintech National Bank Act Courts Preemption NYDFS Fintech Charter Bank Regulatory FDIC

On December 22, the Conference of State Bank Supervisors (CSBS) filed a complaint in the U.S. District Court for the District of Columbia opposing the OCC’s impending approval of a national bank charter for a financial services provider (company), arguing that the OCC is exceeding its chartering authority. According to the complaint, the company’s charter is close to being formally approved by the OCC after being “solicited, vetted and in November 2020 accepted as complete” by the agency. The complaint asserts the company will continue its lending and payment activities (which are currently state-regulated) without obtaining deposit insurance from the FDIC. The complaint alleges that the company is applying for the OCC’s nonbank charter, which was invalidated by the U.S. District Court for the Southern District of New York in October 2019 (which concluded that the OCC’s Special Purpose National Bank Charter (SPNB) should be “set aside with respect to all fintech applicants seeking a national bank charter that do not accept deposits,” covered by InfoBytes here). CSBS argues that “by accepting and imminently approving” the company’s application, the “OCC has gone far beyond the limited chartering authority granted to it by Congress under the National Bank Act (the “NBA”) and other federal banking laws,” as the company is not engaged in the “business of banking.” CSBS seeks to, among other things, have the court declare the agency’s nonbank charter program unlawful and prohibit the approval of the company’s charter under the NBA without obtaining FDIC insurance.