Despite bipartisan opposition, the OCC announced Wednesday it would proceed with its plan to create a federal charter for fintech firms.
“If the OCC proceeds in haste to create a new policy for ‘fintech’ charters without providing the details for additional comment, or rushing to finalize the charter prior to the confirmation of a new Comptroller, please be aware that we will work with our colleagues to ensure that Congress will examine the OCC’s actions and, if appropriate, overturn them,” 34 GOP members of the House Financial Services Committee wrote last week.
CSBS President and CEO John Ryan added: “Today’s announcement by the OCC sets a dangerous precedent,” said Ryan. “The OCC has acted beyond the legal limits of its authority, bypassed and ignored bipartisan objections from Congress, and created new risks to consumers and taxpayers. The new OCC charter preempts existing state consumer protections without a comparable mechanism to replace them. It also exposes taxpayers to the risk of inevitable fintech failures. This is a dangerous combination. CSBS is exploring all options. We urge Congress to continue to weigh in on this important issue.”
Also commenting: Maria Vullo, Superintendent of the New York Department of Financial Services: “The imposition of an entirely new federal regulatory scheme on an already fully functional and deeply rooted state regulatory landscape will invite efforts to evade state usury laws and other consumer protections, stifle small business innovation, create institutions that are too big to fail, and increase the risks presented by nonbank entities. The proposal threatens to create an entirely new federal regulatory program, creating serious regulatory uncertainty that threatens to invade state authority and sovereignty. DFS already regulates money transmitters, check cashers, virtual currency exchanges, and other non-depository institutions to protect the public against money laundering, terrorist financing, and cyber threats. DFS will continue to protect the sovereignty of New York by enforcing state laws and protecting consumers.”
The Center for Responsible Lending also weighed in with opposition. Policy Counsel Courtney Robinson said: “A federal non-bank special purpose charter for fintechs will undoubtedly weaken state-level consumer safety measures. The agency’s past aggressive preemption of state laws has been a significant factor in contributing to national consumer abuses. We’ve seen these kinds of consequences across the industry, including mortgage lending, credit card lending, and bank overdrafts. A special purpose non-bank charter will enable preemption of state oversight and authority, and it will surely serve as vehicle for unaffordable loans.”
The OCC will accept comments on its proposal through April 14.