The Conference of State Bank Supervisors (CSBS) has filed suit against the Office of the Comptroller of the Currency (OCC) to prevent granting bank charters to nonbanks.
“Common sense and the law tell us that a nonbank is not a bank,” John Ryan, CSBS president and CEO, said. “Thus, CSBS is calling on the courts to stop the unlawful, unwarranted expansion of powers by the OCC. The OCC is playing the role of an industrial planner that picks winners and losers, makes consumers vulnerable to predatory actors who do not have to follow state consumer protections, and creates a new risk to taxpayers: failed fintechs seeking bailouts.”
CSBS officials said the organization is seeking court action based on the OCC’s announcement this past July that it is accepting applications for the new bank charter for fintechs, as well as the OCC’s publication of a Licensing Manual Supplement.
“Lest we forget, in the early 2000s the OCC enabled national banks to ignore state predatory lending laws, a move that contributed to the U.S. financial crisis and the largest number of home foreclosures since the Great Depression,” Ryan said. “History cannot be allowed to repeat itself.”
CSBS officials said such charters as the ones proposed by the OCC exceed Congressional authority.