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OCC’s Remarks on Fintech Charter – “A Work in Progress”

October 19, 2017 Leave a comment

It is already, Thursday. It has been a hectic week so far, so I thought I would include a photo I took of more peaceful and serene moments – Michigan’s Upper Peninsula. Beautiful…

Back to the issue at hand,

2017-09-01 18.01.03

Today, Keith A. Noreika, Acting Comptroller of the Currency gave remarks concerning Fintech Companies at Georgetown University’s Fintech Week.

You can read Mr. Noreika’s remarks here

Fintech recap…

The prior OCC, Thomas Curry announced earlier this year that OCC would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

 

“The OCC published a paper discussing the issues and conditions that the agency will consider in granting special purpose national bank charters.” You can check that paper out here

 

Fintech Charter: Praise, Debate, Criticism and a Lawsuit.

The propriety of a Fintech charter has been supported by the Fintech community in general.

 

As reported by Crowdfund InsiderBrian Peters, Executive Director of Financial Innovation Now  “a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal” stated;

“FIN believes that payments and lending regulation needs streamlining for the modern era. We commend the

OCC’s leadership and vision in driving this regulatory discussion. The OCC has rightly concluded that its approach must evolve to ensure that all American consumers and small businesses are empowered with better access to the benefits of financial technology.”

According to Crowdfund Insider  “Fintech Charter could benefit innovative financial firms that can provide superior services at a lower cost for both consumers and businesses.”

 

That being said, the propriety of such action by the OCC has been questioned by others, and officially sued by the Conference of State Bank Superviso

rs as an “unprecedented, unlawful expansion of the chartering authority”- check out the Press Release from the CSBS back in April.

 

The OCC’s present Stance on a Fintech Charter – a Work in Progress.

 

Mr. Noreika stated today that “If, and it is still an if, a fintech company 

 

has ambitions to engage in business on a national scale and meets the criteria for doing so, it should be free to seek a national bank charter.

 

It appears no action will be taken until at least the lawsuit is resolved.

“As for our initiative to use our authority to charter nondepository fintech companies, that remains a work in progress, and as you know that authority is also being challenged by the Conference of State Bank Supervisors and the New York Department of Financial Services. Although we will defend our authority vigorously, we have not decided whether we will exercise that specific authority.”

 

Mr. Noreika also addressed some of the criticism of Fintech Charters.  I won’t go through his entire remarks, but he concludes by reassuring that any fintech comp

 

any approved would – at its core  – be a bank:

“The chartered entity, regulated by the OCC, would be a bank, engaged in at least one of the core activities of banking—taking deposits, paying checks,or making loans. The folks who suggest that the OCC is considering granting charters to nonfinancial companies are wrong.

 

 

Why Fintech Intrigues me – Purpose Driven.

I’ve previously talked about why fintech is so intriguing.

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

 

That’s social entrepreneurship at its finest.

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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OCC’s Remarks on Fintech Charter and a “Conversation about Financial Innovation and Fintech”

Today, Keith A. Noreika, Acting Comptroller of the Currency gave remarks encompassing the topic of Responsible Financial Innovation and Fintech Companies.

2015-11-14 13.57.51You can read Mr. Noreika’s remarks here.

All the excitement surrounding fintech companies reminds me of something that gets me excited – college football, particularly Michigan State Spartan Football (thus, a photo from one of my past experiences at Spartan Stadium)

 

Back to Fintech, by way of recap…

The prior OCC, Thomas Curry announced earlier this year that OCC would move forward with considering applications from financial technology (fintech) companies to become special purpose national banks.

 

Mr. Curry had this to say, in the past:

“Over the past year, no topic in banking and finance has drawn more interest than innovative financial technology, and for good reason. The number of fintech companies in the United States and United Kingdom has ballooned to more than 4,000, and in just five years investment in this sector has grown from $1.8 billion to $24 billion worldwide.

 

“The OCC published a paper discussing the issues and conditions that
the agency will consider in granting special purpose national bank charters.” You can check that paper out here

 

Fintech Charter: Praise, Debate, and a Lawsuit.

The propriety of a Fintech charter has been supported by the Fintech community in general.

 

As reported by Crowdfund InsiderBrian Peters, Executive Director of Financial Innovation Now  “a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal” stated;

“FIN believes that payments and lending regulation needs streamlining for the modern era. We commend the

OCC’s leadership and vision in driving this regulatory discussion. The OCC has rightly concluded that its approach must evolve to ensure that all American consumers and small businesses are empowered with better access to the benefits of financial technology.”

According to Crowdfund Insider  “Fintech Charter could benefit innovative financial firms that can provide superior services at a lower cost for both consumers and businesses.”

 

 

That being said, the propriety of such action by the OCC has been questioned by others, and officially sued by the Conference of State Bank Supervisors as an “unprecedented, unlawful expansion of the chartering authority”- check out the Press Release from the CSBS back in April.

 

 

The OCC’s present Stance on a Fintech Charter

It appears no action will be taken until at least the lawsuit is resolved.

Mr. Noreika stated today that “at this point, the OCC has not determined whether it will actually accept or act upon applications from nondepository fintech companies for special purpose national bank charters that rely on this regulation. And, to be clear, we have not received, nor are we evaluating, any such applications from nondepository fintech companies.

Still, Mr. Noreika expressed his thoughts on the need for a fintech charter:

“I also believe that if you provide banking products and services, acting like a bank, you ought to be regulated and supervised like a bank. It is only fair, but today, that is not happening. Hundreds of fintechs presently compete against banks without the rigorous oversight and requirements facing national banks and federal savings associations.”

 

Why Fintech Intrigues me – Purpose Driven.

I’ve previously talked about why fintech is so intriguing.

a. taking a risk doing something different;

b. disrupting business as usual;

c. for the good of others.

That’s social entrepreneurship at its finest.

 

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka