The Conference of State Bank Supervisors (CSBS), the national organisation of bank regulators in the US, has refiled a lawsuit in an effort to prevent the Office of the Comptroller of the Currency (OCC) from issuing national bank charters to non-depository fintech firms.
In a lawsuit filed in the U.S. District Court for the District of Columbia, state officials said that OCC does not have the authority to grant such charters to non-banks and in doing so could jeopardise consumers.
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State officials also stressed that granting such charters could meddle with state laws as many non-banks are licensed at the state level.
CSBS president and CEO John Ryan said: “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.”
“Lest we forget, in the early 2000s the OCC enabled national banks to ignore state predatory lending laws, a move that contributed to the U.S. financial crisis and the largest number of home foreclosures since the Great Depression. History cannot be allowed to repeat itself.”
CSBS initially filed a suit against the OCC last year, following which OCC said that it was uncertain on whether to proceed with the plan.
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By GlobalDataIn July this year, OCC announced that it will allow fintech firms to apply for a special purpose national bank charter. CSBS’ latest lawsuit is based on this announcement.
Last month, the New York State Department of Financial Services too sued the federal government to stop issuance of national bank charters to fintech firms.
