State of New York Sues OCC Over FinTech Charters

On the heels of a challenge by the State Conference of Bank Supervisors (SCBS) last month, the State of New York filed suit against the Office of the Comptroller of the Currency (OCC) earlier this month to halt implementation of the agency’s proposed special purpose bank chartering system for FinTech companies. In its complaint, New York’s Department of Financial Services explains that the OCC FinTech charter proposal is too broad and will likely destabilize financial markets better managed by state authorities. New York is concerned that state usury and lending laws will be significantly weakened should the charter system start operating.

 
If the OCC is successful in defending against legal challenges from the State of New York and the SCBS, the implementation of the FinTech charter system could render state usury and lending controls ineffective. Coupled with its lawsuit against the OCC, the CSBS have also released a proposal for an alternative cooperative state-level regulatory scheme, called Vision 2020. Former OCC Director Thomas Curry finished his term earlier this month and a new director is expected to be appointed by President Trump soon. Curry was a major advocate of the OCC FinTech charters, and his absence casts considerable doubt as to whether the system will see implementation.