US state regulators have filed a lawsuit against the Office of the Comptroller of the Currency, upping the ante in an increasingly bitter dispute over the federal agency’s plans to offer bank charter status to qualifying fintech firms, according to a release. The complaint, lodged by the Conference of State Bank Supervisors (CSBS) in the US district court of Columbia, alleges that the OCC is over-reaching its authority in granting charter status to non-banks.
“If the OCC is allowed to proceed with the creation of a special purpose nonbank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority. We are confident that we will prevail on the merits,” indicated CSBS President and CEO John Ryan.
The OCC’s plans have led to heated debates with state supervisors, who argue that the proposals will usurp state rules that already exist to nurture innovation and protect consumers. Comptroller Thomas Curry “has shrugged off the criticism,” according to the release, arguing that the National Bank Act gives the OCC the legal authority to grant national bank charters to companies engaged in any aspect of banking and it is not circumscribed just because a company delivers banking services in new ways with innovative technology.
The CSBS suit sets out to challenge Curry’s assertions, claiming that the agency has gone far beyond the limited authority granted to it by Congress under the National Bank Act and other federal banking laws.
“The OCC’s proposed action ignores Congress, seeks to preempt state consumer protection laws, harms markets and innovation, and puts taxpayers at risk of inevitable fintech failures. This is a dangerous combination and one the court should decisively halt,” added Ryan. “To protect consumers and taxpayers, to promote innovation, and to ensure fair and open competition, CSBS was forced to take legal action against the OCC charter.”