CSBS Files Complaint Against OCC Challenging Fintech Charter

The Conference of State Bank Supervisors yesterday filed a complaint in the U.S. District Court for the District of Columbia challenging the OCC’s creation of a new special-purpose national bank charter for nonbank companies and the impending charter approval of fintech Figure Technologies. The complaint is an extension of a 2017 lawsuit initiated by CSBS that argued OCC had gone beyond the authority granted to it by Congress under the National Bank Act and other federal banking laws in granting a bank charter to a nonbank company.

“Figure is essentially the first applicant for the OCC’s fintech charter. Its plan to become a national bank without obtaining deposit insurance is an illegitimate attempt to evade the controversy surrounding the fintech charter and the federal court decision that invalidated it,” CSBS president and CEO John Ryan said.

The complaint adds that “the OCC consistently has attempted to circumvent the deposit insurance requirement for national banks by arguing that a national bank is required to obtain deposit insurance only if it is engaged in receiving deposits. To support the notion that deposit taking is not required to carry on the business of banking, the OCC has relied upon its own never-used (and recently invalidated) regulation, 12 C.F.R. 5.20(e)(1), which provides, without precedent or statutory basis, that receiving deposits is not necessary to carry on the business of banking.”

The American Bankers Association and several other trade associations representing financial institutions on Dec. 7 submitted a letter to the OCC urging postponement of its consideration of Figure’s charter application and raising concerns regarding Figure’s intent to accept uninsured deposits, therefore avoiding FDIC and Federal Reserve oversight.