The Conference of State Bank Supervisors (CSBS) filed a complaint against the Office of the Comptroller of Currency (OCC) to prevent the agency from allowing nonbank financial technology companies to be chartered as banks.
The complaint, filed in the United States District Court for the District of Columbia, asserts that by creating a national bank charter for nonbank companies, the OCC has gone beyond the authority granted to it by Congress under the National Bank Act and other federal banking laws. Those laws authorize the OCC to only charter institutions that engage in the “business of banking,” which under the National Bank Act requires an institution, at minimum, to receive deposits, they assert.
“The OCC’s action is an unprecedented, unlawful expansion of the chartering authority given to it by Congress for national banks. If Congress had intended it to be used for another purpose, it would have explicitly authorized the OCC to do so,” CSBS President and CEO John Ryan said. “If the OCC is allowed to proceed with the creation of a special purpose nonbank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority. We are confident that we will prevail on the merits.”
The OCC is attempting to create a new special purpose charter for nonbank companies that do not take deposits, without express statutory authorization. The complaint says OCC cannot create a special purpose charter for nonbanks without specific congressional approval.
“The OCC’s proposed action ignores Congress, seeks to preempt state consumer protection laws, harms markets and innovation, and puts taxpayers at risk of inevitable fintech failures. This is a dangerous combination and one the court should decisively halt,” Ryan said. “To protect consumers and taxpayers, to promote innovation, and to ensure fair and open competition, CSBS was forced to take legal action against the OCC charter.”