The OCC’s proposed limited-purpose charter for fintech companies was the subject of a lively discussion at the American Bankers Association’s Payments Forum today, as regulators from the OCC and Conference of State Bank Supervisors exchanged at-times opposing views.
Margaret Liu, SVP and deputy general counsel at CSBS reiterated her organization’s view that in moving forward with the limited-purpose charter, the OCC overstepped its authority under the National Bank Act (the CSBS previously filed a lawsuit against the OCC on those grounds). Liu noted that “the OCC has publicly stated that they are looking for companies with tried-and-true business models” for the limited purpose charter, which could “fundamentally alter the balance in the marketplace.” Given that, Congress should be more heavily involved in the discussion of whether or not the OCC has the authority to grant a national fintech charter, Liu said.
Liu also acknowledged that one of the key reasons fintech companies are seeking a national charter — the challenge posed by needing to obtain a license in multiple states with different regulatory requirements — is a current focus of CSBS, and that several initiatives to harmonize state-level licensing are underway or on the horizon.
Kathy Oldenborg, director of payments systems policy at the OCC, emphasized that under the limited-purpose charter, fintech companies would be held the same high regulatory standards as banks, based on the products and services they provide to consumers. She added that while much of the focus around the OCC’s work on innovation has centered on the charter proposal, “the broader initiative was… the ability to signal to banks that it’s okay to innovate. You can work with fintech companies, you can partner with fintech companies, you can buy one if you want. There’s nothing that says you can’t work with fintech companies outside this whole chartering discussion.”
ABA has offered conditional support for the OCC’s fintech charter proposal, provided that existing rules are applied evenly and fairly and with effective oversight. In previous comments to the agency, ABA emphasized that fintech companies applying for the limited-purpose charter must be held to the same standards as national banks in terms of governance structure, capital and liquidity requirements, compliance risk management and financial inclusion, among other things. ABA also called on the OCC to increase its efforts to empower traditional banks to innovate.
