Banking Fintech

America’s troubled regulatory regime laid bare by the OCC

America’s troubled regulatory regime laid bare by the OCC. Image by Lightspring, Shutterstock.com
Written by Chris Skinner

In March, the OCC issued a white paper that described the application process to get a national bank charter in the US. What happened after that? Story by Chris Skinner.

I’m regularly blogging and talking about the legacy economy known as America. This will irritate my American colleagues, but come on, which country still issues more checks (cheques) than the rest of the world combined? Which country took a decade longer to get Chip and PIN than most? Which country is still struggling to work out how to make a faster payment? And which country has zero new banks in the last decade?

America. Land of the free, and home of the brave … as evidenced by their choice of leadership.

Now I don’t want to get into politics, as that’s not my job, but I do want to point to an interesting article on TechCrunch by Nik Milanovic that illustrates the issue well. Back in December, I picked up on this new Office of the Comptroller of the Currency (OCC) ruling to issue national fintech bank charters. This would enable a fintech to go through one regulator to get to market, rather than the 200 or more they would have go through today.

In March, the OCC issued the white paper that described in depth the application process to get a national bank charter, and we all thought it would then go ahead without a hitch. Think again.

The OCC proposal drew over 100 comment letters after its release, and opposition became evident from multiple quarters, including state regulators and the Independent Community Bankers of America. This was followed by the Conference of State Bank Supervisors filing a lawsuit against the Comptroller’s Office over its fintech charter proposal in April. In its complaint, the organisation – which represents state banking regulators – seeks to stop the OCC from granting any fintech charters. The lawsuit continues a decades-long pattern of legal tension between the state bank regulatory system and the national bank regulatory system. The tension involves many facets, including preemption of state laws, “wild card” statutes that permit federal powers to state banks automatically, federal adoption of state-level legal innovations, and much more.

With regard to the specific argument, rather than trying to write the whole thing again, I’m just going to introduce it here (click through to read the whole thing in depth).

An obscure regulatory debate has put the entire US fintech community on edge

As it turned out, the proposal caused a firestorm among numerous fintech industry stakeholders. Weirdly enough, fintech companies, which will arguably be the most impacted by the charter, have been relatively quiet. The strongly vocal opponents of the charter have been an alphabet soup of state regulators, who view this move as a broad overreach of federal authority … (continue reading)

READ NEXT: America’s banking regulations strangle innovation

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Image by Lightspring, Shutterstock.com

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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