OCC Drops Arbitration Rule Challenge as It Defends FinTech Charter in Court
Barely a week after Acting Comptroller of the Office of the Comptroller of the Currency (OCC) Keith Norieka threatened to bring the Consumer Financial Protection Bureau’s (CFPB) recent rule on arbitration before the Financial Stability Oversight Council, the OCC is now reversing course and dropping its challenge. Although the OCC is backing off, the rule is still in danger of being voided by Congress through its authority under the Congressional Review Act.
At the same time, the OCC is defending its own actions related to the creation of special purpose bank charters for FinTech institutions. Shortly after issuing additional information on the FinTech chartering program earlier this spring, the state of New York and the Conference of State Bank Supervisors (CSBS) filed lawsuits to halt the implementation of the program. The OCC filed a motion to dismiss the suit with CSBS on July 28th arguing that any harm at this juncture is speculative. The OCC is still fact-finding, and any attempt to determine harm would be too speculative at this point.
The future of the FinTech chartering system is still uncertain. Congressional Republicans previously requested the OCC delay implementation to address further industry concerns. Further, the exit of previous Comptroller Thomas Curry, the greatest advocate for chartering, leaves the system in greater doubt as a new permanent Comptroller works his way through the confirmation process. FinTech charters would bring companies under the umbrella of federal regulation and severely limit the authority of state regulators over non-bank financial institutions.