US banking regulators drop lawsuit under FinTech charter
A group of US banking regulators has withdrawn its lawsuit that sought to block the federal government from granting bank charters to FinTech companies.
the Conference of State Banking Supervisors (CSBS), the national professional association of banking regulators, announcement On Thursday (January 13), he dropped the lawsuit in federal court challenging the Office of the Comptroller of the Currency (OCC) non-bank charter program and Trick Technologies‘ application for non-banking OCC charter.
CSBS said it withdrew its complaint after Figure, the San Francisco-based fintech, amended its banking application to include seeking FDIC deposit insurance, in line with the legal requirement that national banks obtain deposit insurance. federal deposits before operating as a bank.
“Federal banking laws are clear,” said Margaret Liu, executive vice president of CSBS, in a statement. “Financial services companies, like Figure, that send and receive money from customers or lend money, must obtain FDIC insurance to operate under a federal banking charter.”
State regulators are prepared, she added, to reconsider whether the OCC is considering a bank charter application from a company that is not FDIC-insured.
Filed in 2020, the lawsuit alleged that by creating a national banking charter for non-banking businesses, the OCC exceeded its authority under the National Bank Act. These laws, argued the CSBS, allow the OCC to charter only institutions that legally conduct banking business, which under federal law requires an institution to take minimum deposits and become insured. by the FDIC.
The CSBS lawsuit was part of an ongoing battle between state and federal regulators over who should regulate fintech financial services and online lenders.
As early as 2016, PYMNTS chronicled the CSBS campaign against offering bank charters to FinTechs.
In 2017, PYMNTS reported the CSBS brought an action against the OCC in response to the latter’s plans topropose bank chartersto FinTechs.
Read more: Lawsuit Filed Against OCC FinTech Charter Plans