Common sense tells us that a nonbank is not a bank, says CSBS president
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The Conference of State Bank Supervisors (CSBS) has sued the Office of the Comptroller of the Currency (OCC) as it seeks to stop the agency from granting national bank charters to entities that operate as nonbanks.
In a complaint filed in the US District Court for the District of Columbia, CSBS argued that the OCC would exceed the authority granted to it by Congress if it issues such charters. CSBS is the national organization of bank regulators who supervise roughly three-quarters of all US banks and a variety of nonbank financial services.
“Common sense and the law tell us that a nonbank is not a bank. Thus, CSBS is calling on the courts to stop the unlawful, unwarranted expansion of powers by the OCC,” CSBS President and CEO John Ryan said.
OCC announced in July that it is accepting applications for the new bank charter for fintechs, saying its decision was consistent with bipartisan government efforts at federal and state levels to promote economic opportunity and support innovation.
CSBS’ lawsuit follows one by the New York State Department of Financial Services also challenging the OCC’s move.
CSBS noted that the OCC is only authorized to charter institutions that engage in the “business of banking,” which requires an institution to receive deposits. However, the OCC has said the new charter is for fintechs that do not take deposits.
“The OCC is playing the role of an industrial planner that picks winners and losers, makes consumers vulnerable to predatory actors who do not have to follow state consumer protections, and creates a new risk to taxpayers: failed fintechs seeking bailouts,” Ryan said.
