Conference of State Bank Supervisors CEO Blasts OCC’s Fintech Charter

In a column published last week in American Banker, John Ryan, president and CEO of the Conference of State Bank Supervisors (CSBS), blasted the Office of Comptroller of the Currency’s decision to accept applications for national bank charters from Fintech companies as a “mistake” that will “bring new risks and market distortions to the U.S. economy.”

“If facilitating fintech innovation and protecting consumers is the goal, preempting state licensing and consumer laws with a federal charter is not the answer,” Ryan writes. “The OCC’s charter creates a new class of institutions that benefits large, established fintech firms and harms the very innovation and choice that U.S. Treasury Secretary Steven Mnuchin and the Comptroller of the Currency Joseph Otting say it would provide.”

CSBS is the nationwide organization of state banking and financial regulators from all 50 states, the District of Columbia, and U.S. territories.

“Based on our experience, a federal charter has been most successful at enabling a handful of large, dominant players, as seen in the national banking system,” Ryan continued. “To believe that a federal fintech charter will encourage innovation, as has been argued, is misguided. These come from a system fostered by the states.”

Ryan argues that the OCC’s new policy amounts to preemption of state regulators, which he says have been the primary regulator of fintech companies.

“If misapplied, preemption can undermine financial market competition, innovation, and consumer protections,” he wrote.