Testifying before the House Financial Services Committee today, Acting Comptroller of the Currency Michael Hsu said that the OCC needs to determine how to charter fintech firms in a “safe and sound way, where we can adapt to the innovation.”
“Some are concerned that providing charters to fintechs will convey the benefits of banking without its responsibilities,” Hsu said. “Others are concerned that refusing to charter fintechs will encourage growth of another shadow banking system outside the reach of regulators. I share both of these concerns. We must find a way to consider how fintechs and payment platforms fit into the banking system, and we must do it in coordination with the FDIC, Federal Reserve, and the states.”
The OCC has been focusing on encouraging innovation through initiatives like updating the framework for chartering national banks and trust companies, Hsu said, but added that his “broader concern is that these initiatives were not done in full coordination with all stakeholders. Nor do they appear to have been part of a broader strategy related to the regulatory perimeter.”
Meanwhile, Rep. French Hill (R-Ark.) pressed FDIC Chairman Jelena McWilliams on the issue of credit union acquisitions of community banks, which have resumed after an M&A lull during the pandemic. “We always have a lot of questions when there’s an acquisition of a community bank, especially when that community bank is located in a rural area,” McWilliams responded. “My concerns have not changed.”