Now financial technology companies have more clues as to what to expect from the Office of the Comptroller of the Currency and its plans for a special purpose national bank charter.
In a speech to the Exchequer Club in Washington, D.C., July 19, OCC acting comptroller Keith Noreika defended the agency's right to grant charters to nonbanks, including fintechs, in some of his first public remarks on the initiative that was introduced by his predecessor, Thomas Curry.
"Providing a path for these companies to become national banks is pro-growth and in some ways can reduce regulatory burden for those companies," said Noreika, a former partner with Simpson Thacher & Bartlett, in prepared remarks.
He pointed to fairness in competition, noting that banking products and services "acting like a bank" ought to be regulated like one.
"Hundreds of fintechs presently compete against banks without the rigorous oversight and requirements facing national banks and federal savings associations," said Noreika.
Noreika acknowledged that he has to "be careful" on this topic since the agency is a defendant in lawsuits accusing the federal banking agency of overstepping its authority by introducing its draft charter proposal in March. State regulators claim the comptroller's office lacks authority to create a special purpose charter without approval from Congress.
As for individuals who think offering charters to fintechs puts banks at a disadvantage, they "have it backwards" in Noreika's opinion.
"The status quo disadvantages banks in many ways," he said, adding that although charters provide an advantage to the firms receiving them, granting them "would help level the playing field in meaningful ways."
Noreika addressed the question of whether he believes the OCC has the authority to grant national bank charters to financial technology companies that don't take deposits.
"A potential spoiler here to our upcoming litigation filings but the answer to that question is a rather simple 'yes,'" he said.
Although Noreika maintains the OCC is authorized to grant charters to nondepository fintech firms, the agency is still evaluating its options and has not determined whether it will open the charter to nondepository fintechs.
Following the speech, the OCC confirmed the agency has not received any special purpose charter applications from fintech companies.
In response to Noreika's speech, John Ryan, president and CEO of the Conference of State Bank Supervisors, which is suing the OCC, issued the following statement: "CSBS continues to believe that the OCC's proposed fintech charter lacks legal authority. Legal precedent and common sense suggest as much. Now, it is a matter for the courts to decide. Meanwhile, state regulators are focused on modernizing non-bank regulation to make state licensing and supervision more effective and integrated across the 50 states."
The OCC must respond to the CSBS lawsuit by July 29.
Although Noreika defended the agency's right to grant special purpose charters for fintech companies, he emphasized it is only "one choice."
"That option exists alongside other choices that include becoming a state bank or operating as a state-licensed financial service provider, or pursuing some partnership or business combination with existing banks," he said.