State banking regulators declared neither victory nor conceded defeat in the wake of a federal court’s dismissal of their lawsuit against the federal regulator of banks’ proposal to issue a “fintech” charter.
Monday, the U.S. District Court for the District of Columbia dismissed the lawsuit brought by the Conference of State Bank Supervisors (CSBS, a professional association of state banking regulators) against the Office of the Comptroller of the Currency (OCC). The association had challenged a proposal by the OCC to offer charters that would let so-called fintech companies (firms providing financial services through technology, such as via the Internet) do business nationwide.
Judge Dabney Friedrich ruled that since the OCC has not yet reached a final decision on the fintech charters, the claim of harm by the CSBS in its action was speculative.
In its lawsuit filed in April 2017, CSBS argued that the OCC’s plan to grant the national charters exceeded the federal banking regulator’s statutory authority and that fintech firms are best regulated by individual states.
In a statement issued Tuesday, association President and CEO John Ryan said CSBS appreciated the judge’s consideration and timely decision on this matter. Ryan also noted that states continue to supervise a “vibrant financial services market of banks and nonbanks alike,” promoting access to innovative products while ensuring consumer protection.
“Indeed, states are actively modernizing financial regulation by moving towards an integrated, 50-state system of licensing and supervision for fintechs and other nonbanks,” Ryan stated.
A fintech charter was first voiced by former Comptroller Thomas Curry, who’s term ran out in April 2017. Curry was succeeded by Joseph Otting (in November), who has said that he expects his agency in the next two to three months would voice its position about whether a fintech should be able to apply for a bank-like charter. That license, he has said, would allow companies offering online lending and other financial services to operate nationally while adhering to federal banking standards.