CSBS Comment Letter Warns OCC Fintech Charter Will Harm Innovation and Consumers,
Threaten Financial System and Taxpayers
(Washington, DC) - The Conference of State Banking Supervisors (CSBS) submitted a comment letter today reiterating its opposition to the Office of the Comptroller of the Currency (OCC) proposal to issue a special charter for fintech companies.
- CSBS argues a federal charter for fintech companies will harm consumers and the U.S. financial system by:
- Putting the OCC in the position of arbitrarily picking winners and losers in the fintech marketplace;
- Weakening consumer protections by once again pre-empting existing, effective state laws;
- Exposing taxpayers to the risk of fintech failures; and
- Exceeding the legal limits of the OCC's chartering authority.
“The OCC’s unauthorized expansion of power should not be allowed to move forward because it exceeds its legal authority and makes an end run around Congress,” said John Ryan, CSBS president and CEO. “A federal charter would stifle innovation, not foster it, and advantage large, established institutions at the expense of new and small ones. No one should have a monopoly on innovation.”
“The proposal would also create a new category of risk to taxpayers and the federal government,” said Ryan. “Fintechs want access to the Fed payments system and discount window, but not strict oversight. In the event of fintech failures, taxpayers would be left holding the bag.”
“Finally, the OCC action would preempt important state consumer protection laws. The OCC has a history of harming consumers through preemption. In the lead-up to the U.S. financial crisis, the OCC preempted state anti-predatory lending laws for national banks,” said Ryan. “Congress was forced to step in and limit the OCC’s authority. We shouldn’t repeat the mistakes of the past.”
CSBS urges policymakers to oppose the OCC’s proposed fintech charter and insist that the agency refrain from acting beyond its legal authority, stifling innovation and also creating new risk to consumers and taxpayers.
Congress created the dual-banking system where state and federal bank regulators collaborate to provide effective supervision for banks and the larger financial services marketplace. State financial regulators monitor safety and soundness of chartered and licensed institutions; foster a thriving, diverse, and innovative financial system; ensure that financial institutions are operating within the law; and protect their communities from illegal and predatory practices. State regulators play a critical role in the nation’s economy by ensuring state-chartered financial services providers operate in a safe and sound manner as they serve state and local credit markets.
Comment Letter [PDF].