WASHINGTON — A federal judge dealt a blow to the Office of the Comptroller of Currency’s special-purpose fintech charter on Monday, ruling that the agency lacked legal power to grant a bank charter to a nonbank entity that wasn't eligible for federal deposit insurance.
The OCC first proposed the charter in 2015 as a possible avenue for fintech firms to access the nationwide financial system without having be licensed in all 50 states.
The move was opposed by the Conference of State Bank Supervisors and the New York State Department of Financial Services, both of which filed lawsuits claiming the agency lacked the power to create a federal charter for nonbanks.
On Monday, the U.S. District Court for the Southern District of New York ruled in favor of the state regulator. Judge Victor Marrero said in his decision that the National Bank Act’s “business of banking” clause “unambiguously requires that, absent a statutory provision to the contrary, only depository institutions are eligible to receive national bank charters from the OCC,” according to the court filing.
The ruling echoed ar decision from Marrero in May, when the court rejected the OCC’s motion to dismiss the lawsuit.
In response to the ruling, an OCC spokesperson said Tuesday morning that the agency "disagrees with the decision and the court’s interpretation of the authority the National Bank Act grants the OCC. The agency plans to appeal the ruling to resolve this issue."
