OCC Acting Comptroller Noreika’s Recent Remarks on FinTech Charter

By Yuki Sako, Peter Nelson and Elizabeth Nelli

On July 19, 2017, the US Office of the Comptroller of the Currency (OCC) Acting Comptroller Noreika stated that special-purpose national bank charter is a “good idea that deserves thorough analysis and careful consideration.” He thinks that, despite the pending lawsuits filed by state bank regulators to challenge, the OCC has the authority to grant national bank charters to fintech companies in appropriate circumstances.

The national fintech charter proposal is strongly opposed by state bank regulators and financial institutions who believe that it would allow fintech institutions to avoid state consumer protection laws and give them an advantage over traditional financial institutions. Noreika dismissed these claims, asserting that giving the firms national bank charters would increase oversight and accountability. The Conference of State Bank Supervisors and the New York Department of Financial Services both filed lawsuits alleging that the OCC does not have the authority to issue charters to firms that do not engage in deposit-taking or other traditional banking activities.

At this point, the Acting Comptroller stated, the OCC had not determined whether it would actually accept or act upon applications from nondepository fintech companies for special purpose national bank charters under 12 CFR §5.20. However, while the OCC has no imminent or concrete plans to use section 5.20 to charter an uninsured special purpose fintech national bank, the OCC’s other chartering options such as savings and loan associations, trust companies and other special-purpose national banks may be used.  He suggested that many fintech business models may fit well into these long-established categories of special purpose national bank charters that do not rely on the contested provision of regulation, section 5.20.

Acting Comptroller Noreika’s complete remarks can be found here.