OCC to Continue FinTech Plans Despite Legal Challenge
Even before the Office of the Comptroller of the Currency (OCC) announced official plans to offer FinTech companies national bank charters, there were lawsuits in place to stop such a move. Although a judge dismissed one round of complaints saying they were premature, the Conference of State Bank Supervisors (CSBS) filed suit against to OCC just a couple of weeks ago following a similar suit by New York Department of Financial Services (NYDFS) superintendent Maria Vullo. Despite these mounting legal challenges, Law.com reports that the agency is still planning to move forward with the Special Purpose National Bank charters.
During an appearance at Georgetown University Law Center, OCC head Joseph Otting first said he was “disappointed” by the lawsuits that had been filed against his agency. However he went on to say that they were still planning to start accepting applications — possibly as soon as next month. Otting said, “A number of entities have decided that it’s still worth going forward. And so I think that we will issue charters independent of their action. I also think that we will get our day in court on this issue.” Furthermore, while some have suggested that certain FinTech startups may want to hold off on applying until the legal matters are settled, Otting suggested that most are “unfazed,” adding, “I think people are aware of it. Most people who have gone to their law firms and have asked their opinion would say it clearly is within the authority of the OCC to do this.”
Interestingly, in defending the OCC’s right to issue the new charters, Otting accused the pending lawsuits of “harming consumers.” Meanwhile, on the other side, the CSBS and NYDFS have suggested the same of the charter plans. In fact Vullo said that the OCC’s FinTech plans would put the public “at great risk of exploitation.”
Ultimately, while Otting and the OCC may be confident in their eventual victory, the former may be a bit overly optimistic in thinking that most firms pondering a potential application are free from reservations about the current suits. While there will almost certainly be some that join the OCC regardless, it’s hard to imagine that there won’t be other companies who will opt to sit back and wait for all this to blow over. All that said, it seems we’ll have a better idea of how FinTechs will react when the OCC opens its Special Purpose National Bank charter applications either sometime this year or early next year.