Two partners from the Boston-based law firm Nutter penned an opinion piece yesterday in American Banker, saying it is a mistake to block the U.S. Office of the Comptroller of the Currency from issuing a fintech charter.
The two partners were Thomas Curry, a former comptroller of the OCC and Massachusetts state banking commissioner, and Jason Cabral, another member of Nutter’s financial services group.
Recently, the Conference of State Bank Supervisors (CSBS) and the New York State Department of Financial Services refiled a lawsuit against the OCC to prevent the agency from allowing fintechs to apply for special purpose national bank charters licenses.
“The news again raises the potential for a major missed opportunity for the creation of a ‘dual fintech system’ – a system which, if fostered and allowed to grow, stands to benefit all stakeholders and the public,” the article stated.
The OCC in August said it would begin accepting applications for national bank charters from fintech companies. Qualifying fintech companies would also be able to apply for federal charters under the OCC’s authority to charter full-service national banks and other special purpose banks, such as trust banks, banker’s banks and credit card banks.
The move, which had started to get underway while Curry was serving as a comptroller, drew harsh criticism from some industry groups.
“An OCC fintech charter is a regulatory train wreck in the making,” John W. Ryan, president and CEO of the Conference of State Bank Supervisors, said in a statement at the time. “Such a move exceeds the current authority granted by Congress to the OCC. Fintech charter decisions would place the federal government in the business of picking winners and losers in the marketplace. And taxpayers would be exposed to a new risk: failed fintechs.”
The CSBS, a group that supports state regulators in advancing the system of state financial supervision, had sued the OCC earlier this year after the agency released a proposal for granting national charters to fintechs, but the case was dismissed.
Also, earlier this year, the CSBS organized a multi-state compact between seven states, including Massachusetts, standardizing key elements of the licensing process for money services businesses.
Under the agreement, if one state reviews key elements of state licensing for a money transmitter – IT, cybersecurity, business plan, background check and compliance with the federal Bank Secrecy Act – then other participating states would agree to accept the findings.
In the opinion piece, Curry and Cabral said a dual fintech system is legally consistent with the National Bank Act. This view creates healthy regulatory competition that promotes excellence in regulation and benefits all stakeholders and the public, the two said.
“In fact, we are already seeing the benefits of a dual system from a regulatory standpoint,” the opinion piece stated. “Since the OCC’s launch of its responsible innovation whitepaper in March 2016 [released while Curry headed the agency], the states have responded by trying to better harmonize their disparate licensing and supervision regimes.”
