Comptroller Of The Currency Tom Curry Discusses Fintech Charters

In his remarks at the LendIt Conference in New York, Comptroller of the Currency Tom Curry discussed the special purpose national bank charters to be granted by the OCC to fintech companies and addressed the various questions, criticism and challenges that have been made since the OCC's fintech charter announcement (click here to read Orrick's previous client alert regarding this announcement).

OCC Authority

In response to comments challenging the OCC authority and the wisdom of issuing such charters, Curry said, in no uncertain terms, that the OCC will be issuing special fintech charters. Curry said that the OCC has authority under the National Bank Act to grant special purpose national bank charters to fintech companies "engaged in the business of banking," including to firms that do not take deposits. Curry emphasized that limited purpose charters have been issued for decades. He also said that the OCC has the knowledge of the relevant models, the experience and the appropriate resources that will allow it to successfully oversee the fintech chartered entities.

The question whether firms with fintech charters will be subject to regulation under the Bank Holding Company Act is still under discussion by the OCC and the Federal Reserve.

Fintech Charter Requirements

Curry said that fintech chartered firms will not be required to obtain special purpose national bank charters and that extremely high standards would be imposed on firms that are granted charters. Such a charter is not for everyone, and Curry expects that there will be fintechs that prefer to operate under a state licensing model.

There is a recognition at the OCC that fintech chartered firms are different from brick-and-mortar banks, and those differences will be taken into account in setting standards. Fintech chartered firms will be subject to regular on-site supervision by experienced examiners focused on safety and soundness and compliance with law, and with appropriately calculated capital and liquidity protections (which have not yet been specified, but which Curry suggested will be tailored to the model of a low-asset fintech platform).

A supplement to the OCC's licensing manual will be published and will describe the capital, liquidity and other standards and the business plan to be required of firms with fintech charters. Financial inclusion is a responsibility of all federally chartered institutions and will be a responsibility of fintech chartered firms as well...