A plan to allow financial technology firms and other nonbanks to obtain banking licenses was criticized by U.S. Sens. Sherrod Brown (D-OH) and Jeff Merkley (D-OR) for weakening consumer protections.
The Office of the Comptroller of the Currency (OCC) announced in early January that “fintech” and non-traditional banks can get licensed to operate throughout the U.S. without state authorization or having to join with other banks.
“While we share your goal of ensuring that affordable banking products are more accessible, we are concerned with the OCC’s proposal to expand its powers by chartering non-bank institutions,” the Senators wrote in the Jan. 9 letter to the OCC. “Offering a new charter to non-bank companies seems at odds with the goals of financial stability, financial inclusion, consumer protection, and separation of banking and commerce that the OCC has upheld under your tenure.”
Giving licenses to specialty institutions that do not provide the full range of banking services, like low-cost checking and savings accounts, could negatively impact consumers, the senators argued.
The letter said the OCC’s plan “could also allow predatory alternative financial services providers to spread more quickly given the blessing of the federal government and elimination of state-based protections for working class Americans.”
Brown and Merkley urged the OCC to work with state regulators to find ways for financial technology firms and other innovative nonbank providers to work within existing laws.