CSBS Responds to Treasury, OCC Fintech Announcements

Statement by John W. Ryan 
President and Chief Executive Officer, Conference of State Bank Supervisors 

Two developments occurred today: a report issued by the Treasury Department on financial innovation and a decision by the Office of the Comptroller of the Currency (OCC) to move forward with creating a new national bank charter for select, uninsured fintechs.  

Treasury Report

Supporting innovation requires financial regulators to think creatively about our responsibilities, and it is appropriate for the Treasury Department to join the public debate.  

We appreciate the Treasury’s recognition of the vital role performed by state regulators in overseeing nonbank financial service providers. And we are pleased that Treasury noted the substantial progress states have made towards harmonizing the multistate experience for industry.  

Through CSBS Vision 2020, we are modernizing nonbank regulation by shaping an integrated, 50-state system of licensing and supervision for fintech firms and other nonbanks. 

At the same time, we disagree with certain Treasury recommendations. We do not support creation of new federal rules or unauthorized federal charters that would seek to compromise the ability of state officials to apply and enforce state laws. And so, we disagree with Treasury’s recommended changes to the valid-when-made doctrine and the true-lender doctrine, and the creation of an OCC special purpose bank charter for fintech companies. 

OCC Charter

An OCC fintech charter is a regulatory train wreck in the making. 

Such a move exceeds the current authority granted by Congress to the OCC. Fintech charter decisions would place the federal government in the business of picking winners and losers in the marketplace. And taxpayers would be exposed to a new risk: failed fintechs.  

Let us not forget that the last time the OCC pre-empted state consumer protection laws in a sweeping manner -- in the early 2000s -- predatory lenders were let off the hook and contributed to the largest number of home foreclosures since the Great Depression. 

On behalf of the citizens to whom we are accountable, state regulators are keeping all options open to stop this regulatory overreach.