Fintech Charter Q&A: OCC Answers Skeptics

In a recent Q&A with American Banker, Amy Friend, Chief Counsel to the Office of the Comptroller of the Currency (OCC), answered questions surrounding the OCC's proposed fintech charter. The Q&A covered a broad range of topics, from regulatory arbitrage to when the first charter might be issued, among others.

On the potential for regulatory arbitrage, Friend pushed back, stating "certain laws apply to all national banks, and the OCC will apply those laws to fintech companies that receive a special-purpose national bank charter." In addition, she reiterated the baseline expectations that the OCC "will require capital, liquidity, sound governance and a robust business plan" as a foundation for any company they charter.

When pressed on whether the chartering process might be arbitrary or ad-hoc, Friend again pushed back, noting that the OCC has released a comprehensive 128-page booklet detailing the chartering process, which makes clear the minimum expectations. Moreover, she also emphasized that in addition to any regulatory scrutiny that applies to national banks, field investigations and deep background information on the organizing group, its executive officers and their competencies, and the viability of the business plan would be essential for fintech firms interested in the charter.

One major takeaway from the Q&A was Friend's response to a question on what kind of business models the OCC would consider. Friend stressed that while OCC "does not dictate business models," payday lenders and others whose business models have been shown to exhibit abusive practices would almost certainly not be eligible for the charter. However, she left open the possibility that non-bank mortgage lenders and other fintech firms with varying business models might garner consideration.

Lastly, in response to a posed question, Friend confirmed that the first issuance of the fintech charter could come as soon as the end of April, when the Comptroller’s term ends. "The OCC vets all application for charters and once the application is filed, it seeks to make a decision within 120 days or as soon as possible thereafter," she added.

The comment period on the proposal is currently open and SFIG will be commenting through the SFIG Marketplace Lending Committee. If you are interested in joining the Marketplace Lending Committee, please contact Jennifer.Wolfe@sfindustry.org.

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