ABA, NCRC: Fintech Firms with Bank Charters Should Be Subject to CRA

In an American Banker op-ed today, ABA President and CEO Rob Nichols and National Community Reinvestment Coalition CEO Jesse Van Tol expressed opposition to moves by the OCC to grant banking charters to fintech firms that would allow them access to the banking system while circumventing many of the rules and regulations that banks are required to adhere to, such as the Community Reinvestment Act regulations.

The CEOs flagged in particular a recent charter application submitted by Figure Bank, which would allow the firm to gather uninsured deposits. If approved, the firm could then apply for membership in the Federal Reserve system, while avoiding full CRA compliance, which is only required for firms that gather deposits insured by the FDIC.

“In the case with Figure’s OCC application, it is proposing a substitute plan that is vague on details, offers no clear measures for holding it accountable to meet the needs of underserved communities, and without a clear timeline for implementation,” Nichols and Van Tol wrote. “The OCC itself has not explicitly outlined how these substitute plans would work outside of full CRA compliance while still equally meeting the needs of underserved communities.”

The CEOs called on the OCC to deny the Figure application, and to “look to Congress to define the scope, benefits and obligations of a banking charter.”