State Banking Regulators Sue US Treasure Bureau Over Fintech Proposal

State Banking Regulators Sue US Treasure Bureau Over Fintech Proposal

State banking regulators are suing the Office of the Comptroller of the Currency (OCC) over its plan to create a special purpose national bank charter

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State banking regulators are suing the Office of the Comptroller of the Currency (OCC) over its plan to create a special purpose national bank charter for FinTech companies, as it was reported at the end of last week.

The proposal is said to violate federal banking law, as The National Law Journal (nationallawjournal.com) explained.

The OCC, an independent bureau under the US Treasury, announced it would consider applications from fintech companies to become special purpose national banks.

“The reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision.”, said Comptroller Thomas Curry at the time.

“Granting national charters to the companies who desire and warrant one doesn’t weaken the competitive position of existing banks or the dual banking system. In some ways, it levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones.”, he added.

According to OCC, their oversight would reportedly encourage the companies to explore ways to promote fair access and financial inclusion.

The law suit that followed was filed in federal district court in Washington, D.C., claiming that the independent bureau doesn`t have the authority for such proposal. As the state officials made clear, the OCC needs Congressional approval for a special purpose charter.

The CSBS made a statement saying that the OCC can set a dangerous precedent that any federal agency can act beyond its authority.

Bill Grassano, an OCC spokesman, said OCC will not comment on the pending or active litigation.

At the same time, the lawsuit was supported by Maria Vullo, New York State Department of Financial Services superintendent. She said that this may harm the existing community banks and small companies working to serve local communities.

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