OCC Fintech Charter Faces Uncertain Future After Curry’s Departure

May 9, 2017 at 4:16 pm ET

Thomas Curry, the now-former chief of the Office of the Comptroller of the Currency, left his post with a major piece of unfinished business — a plan to offer national bank charters to financial technology firms.

The fintech charter was a key initiative for Curry, who was replaced on an interim basis by lawyer Keith Noreika after stepping down on May 5. Curry’s five-year term ended April 9, and he stayed in his position under a brief extension.

The agency is still reviewing comments on its March paper about chartered fintech firm applications, OCC spokesman Bryan Hubbard said Tuesday. He offered no update on a charter timeline.

The OCC will likely pause movement on its fintech charter plan until the Trump administration appoints a permanent head of the agency, according to Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc.

“I suspect all consequential policy decisions such as this will be on hold, pending the appointment of a permanent comptroller,” Petrou said in an interview Tuesday. “At that point, I think the structure that Tom Curry proposed for the fintech charter will be significantly revised.”

The fintech charter under Trump’s eventual OCC pick would likely depart from the “financial inclusion” tenet in Curry’s plan, which would require firms to explain how they’d ensure fair access and treatment of consumers, Petrou said. She added that the new OCC regime might also be more open to a “sandbox” approach to fintech regulation, a model that gives fledgling businesses leeway to experiment while exempting them from certain regulatory restrictions. That would mark a departure from the OCC’s current plan, which has taken a more hands-on approach.

Brian Knight, a senior research fellow for the Financial Markets Working Group at George Mason University’s Mercatus Center, said the OCC should put the charter plan on hold.

It’s a matter of “good government” to defer to the new administration on major policy, but it’s also an opportunity to sharpen a blunt approach to fintech firms that don’t fit the traditional-bank mold, Knight said in an interview Tuesday.

“Things looked like they were going in a direction that I would argue was unnecessarily burdensome,” Knight said. A central question in the fintech charter debate is whether certain requirements should be applied to firms that don’t take deposits like traditional banks do, he said.

“It should be Congress that should be having that debate,” Knight said.

And while the OCC isn’t likely to make major headway on the charter until its top position is permanently filled, it still faces a lawsuit from state bank regulators who have bristled at the charter’s potential reach. The group of state regulators, the Conference of State Bank Supervisors, argued in a lawsuit filed last month that the OCC is overstepping its authority, a position shared by progressive groups that want stringent consumer protection rules. Curry rebutted that argument in public remarks, and emphasized consumer protection as a top priority of the charter.

“The centerpiece of the litigation gets to a question of, ‘Does the OCC have existing authority to expand the definition of a national bank charter to include nonbanks?'” CSBS spokesman Jim Kurtzke said in an interview Tuesday. “CSBS believes the answer is no.”

Knight credited Curry for attention to the fintech sector, but said he hopes the Trump administration is “more willing to depart from sort of the standard, traditional-bank template.”

“Let’s build a regulatory regime from the ground up that fits [fintech], rather than just taking the traditional depository model and slicing off a piece here, buffing up a piece there,” he said.

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