DFS Superintendent Vullo Supports CSBS Lawsuit Challenging Proposed OCC “Fintech” Charter
This just in from New York State Department of Financial Services . . . . .
April 26, 2017 : Statement by New York Financial Services Superintendent Maria T. Vullo Regarding the Lawsuit Filed by the CSBS Challenging the Authority of the Comptroller of the Currency to Create a Nonbank Special-Purpose National Bank Charter for “Fintech” Companies
“The New York State Department of Financial Services strongly supports the action taken today by the Conference of State Banking Supervisors (CSBS) against the Office of the Comptroller of the Currency (OCC). The National Bank Act does not provide the OCC with authority to create a new national bank charter for “fintech” companies. The proposal threatens to create an entirely new federal regulatory regime, threatening state sovereignty and strong state consumer protection laws, including New York’s usury laws and prohibitions on payday lending.
New York and other states are the cradles of innovation. The creation of an OCC national charter will stifle rather than encourage innovation; it would be an avenue for large, dominant firms to control the development of technology solutions in the financial services industry, thereby harming existing community banks and small businesses seeking to serve local communities. A national charter would also encourage large “too big to fail” institutions, permitting a small number of well-financed firms to dominate financial services simply because they are able to get a national charter. As the recent financial crisis demonstrated, lax regulation – along with pre-emption of the states – is devastating to our financial system and consumers.
DFS licenses and supervises more than 2,000 banking and nonbanking institutions, many of which use technology as a core part of their business to lend or transfer money, including money transmitters, licensed lenders, sales finance companies, premium finance agencies, mortgage banks and bankers and virtual currency exchanges.
State regulators like DFS are experienced and best equipped to regulate cash-intensive nonbank financial service companies doing business in the state, including the necessary oversight and enforcement of anti-money laundering, payday lending, consumer identification and transaction monitoring laws. The OCC, by contrast, has never before regulated nonbank entities, and, as the CSBS correctly sets forth in its complaint, the OCC lacks the legal authority under the National Bank Act to do so.”
For further information, contact: Richard Loconte, 212-709-1690, Richard
