Calling it an important step to “promote innovation in the financial services marketplace,” the acting director of the federal consumer financial protection agency late Tuesday praised action by the Treasury Department and the regulator of national banks to support a federal charter for “fintech” companies.
However, Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) Acting Director John (“Mick”) Mulvaney said nothing in the statement about a recommendation made by Treasury to rescind a rule by the bureau on payday lending. Earlier this year, Mulvaney said his agency planned to “revisit” the rule.
In a statement issued Tuesday afternoon, Mulvaney said his agency welcomes “the important steps taken by our fellow agencies to promote innovation” regarding the fintech charter.
His statement followed two actions taken Tuesday by the Treasury Department in the morning and the Office of the Comptroller of the Currency (OCC) in the afternoon.
At 10 a.m. ET Tuesday, Treasury released its fourth and final report in a series responding to President Donald Trump’s 2017 executive order focusing on regulatory core principles. Tuesday’s report offered recommendations to “support nonbank financial institutions, embrace financial technology, and foster innovation.”
Among the more than 80 recommendations in the 222-page report were: that a new bank (fintech) charter should be offered by the OCC, and that the agency should move forward with “prudent and carefully considered applications” for special purpose national bank charters; and that the payday lending rule by the BCFP should be rescinded, with a recommendation that regulators “take steps to encourage sustainable and responsible short-term, small-dollar installment lending by banks.”
At 2 p.m. ET Tuesday, OCC announced it was accepting applications for national bank charters from “nondepository financial technology” companies (fintechs) engaged in “the business of banking.” The agency said its decision to begin accepting the charters is “consistent with bi-partisan government efforts at federal and state levels to promote economic opportunity and support innovation that can improve financial services to consumers, businesses, and communities.”
At 5 p.m. ET Tuesday, Mulvaney issued his statement, which only addressed the fintech charter. “Success will be determined by how well U.S. regulators coordinate their efforts,” Mulvaney said. “We look forward to working with our State and Federal partners to ensure American global leadership in the FinTech space for years to come.”
No mention was made about the agency’s payday lending rule.
Soon after taking office in November (on an appointment by Trump), Mulvaney announced that the agency would revisit the payday lending rule. Since then, BCFP has placed that action on its “spring 2018 regulatory agenda.” In that listing, the bureau only notes: “The Bureau of Consumer Financial Protection (Bureau) announced in January 2018, that it intends to open a rulemaking to reconsider its 2017 rule titled Payday, Vehicle Title, and Certain High-Cost Installment Loans. Lenders would not need to comply with provisions of that rule until August 2019.” No additional details are provided; no additional action has taken place.
In the meantime, Trump has nominated Kathleen (“Kathy”) Kraninger as permanent director of the BCFP, to succeed Mulvaney. The Senate Banking Committee is scheduled to consider a recommendation on the nomination to the full Senate Thursday.