Senators Sherrod Brown and Jeffrey Merkley have published a letter, sent to Thomas Curry, Comptroller of the Office of the Comptroller of the Currency (OCC), bashing his push to create a Fintech charter for innovative financial firms.
Brown and Merkley state;
“While we share your goal of ensuring that affordable banking products are more accessible, we are concerned with the OCC’s proposal to expand its powers by chartering non-bank institutions. Offering a new charter to non-bank companies seems at odds with the goals of financial stability, financial inclusion, consumer protection, and seperation of banking and commerce that the OCC has upheld under your tenure.”
The OCC proposed the new Fintech Charter at the end of 2016. The initiative was in recognition to the growing importance of financial innovation and the benefits which may be provided to both consumers and business. The OCC described new special purpose charters as in the national interest of supporting responsible innovation. Providing a national charter for Fintech firms was said to promote economic growth while recognizing that Fintech is the future of banking. The OCC also pointed out that thousands of Fintech firms are already providing services to both consumers and businesses.
Brown and Merkley’s concern appears to be driven by “charter shopping” where firms will seek to gain access to “avoid unfavorable state and federal laws”.
Protecting Big Banks
The US regulatory regime for financial services is one of the most convoluted and confusing in the world. Only the largest firms have the financial capacity to comply with the incredible number of mandates, both state and federal, thus curtailing competition against big banks. The OCC proposal is in the process of soliciting feedback and not yet actionable. Recent commentary on the Fintech Charter remains mixed. Fitch is of the opinion it could harm Fintech firms while Moody’s deemed it a possible benefit. The proverbial jury remains out.
While the letter from Brown and Merkley point to consumer protection demands many observers believe the biggest beneficiaries could be the big banks as barriers to entry rise and competition is thwarted.
The two Senators remain cautious of emerging Fintech innovation;
“Emerging financial technologies present challenges that Congress has failed to adequately study… We would urge the OCC to refrain from offering alternative or special purpose charters…”
The letter to the OCC is embedded below.