CSBS Files Complaint Against Comptroller of the Currency

Washington, D.C. – The Conference of State Bank Supervisors (CSBS) announced today it has filed a complaint in the United States District Court for the District of Columbia against the Office of the Comptroller of Currency (OCC). The complaint seeks to prevent the agency from moving forward with an unlawful attempt to create a national nonbank charter that will harm markets, innovation and consumers.

“The OCC’s action is an unprecedented, unlawful expansion of the chartering authority given to it by Congress for national banks.  If Congress had intended it to be used for another purpose, it would have explicitly authorized the OCC to do so,” said John W. Ryan, CSBS President and CEO.  “If the OCC is allowed to proceed with the creation of a special purpose nonbank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority.  We are confident that we will prevail on the merits.”

The complaint asserts that by creating a national bank charter for nonbank companies, the OCC has gone far beyond the limited authority granted to it by Congress under the National Bank Act and other federal banking laws. Those laws authorize the OCC to only charter institutions that engage in the “business of banking,” which under the National Bank Act requires an institution, at minimum, to receive deposits.  Yet the OCC is attempting to create a new special purpose charter for nonbank companies that do not take deposits, without express statutory authorization. The OCC does not have the authority to create a special purpose charter for nonbanks without specific congressional approval.

“The OCC’s proposed action ignores Congress, seeks to preempt state consumer protection laws, harms markets and innovation, and puts taxpayers at risk of inevitable fintech failures. This is a dangerous combination and one the court should decisively halt,” said Ryan.  “To protect consumers and taxpayers, to promote innovation, and to ensure fair and open competition, CSBS was forced to take legal action against the OCC charter.”

“State regulators already supervise a vibrant financial services marketplace that includes non-banks and banks.  Tens of thousands of mortgage, money transmission, debt collection, and consumer finance companies – not to mention over 75% of this nation’s banks — already operate under the state system,” said Ryan.  “That regulatory structure has produced a robust platform for innovation.  Moving forward, state regulators will continue to streamline regulation and automate licensing across state lines, ensuring the system will work even better for state-licensed companies and consumers while protecting taxpayers.”

The CSBS filing is available here. Attached exhibits sent with the complaint are available here.