OCC’s Brooks, noting task force’s take on fintech charter, draws a line between chartering and consumer protection functions

The head of the agency that charters national banks and thrifts on Wednesday welcomed a task force report from the consumer financial protection agency for “endorsing” the need for federal charters for financial technology – or fintech – companies but pushed back on the notion of the consumer agency exercising chartering authority.

Brian Brooks, the acting comptroller at the Office of the Comptroller of the Currency (OCC), said the agency agrees with the Consumer Financial Protection Bureau (CFPB) task force’s conclusion that “the nation needs federal charters for fintechs to effectively, efficiently, and safely serve the financial needs of consumers across the nation under a single uniform set of rules.” But Brooks’ statement appears to push back on the notion of the bureau being assigned fintech chartering authority.

“In its wisdom, Congress in the Dodd-Frank Act separated chartering and prudential supervision from consumer protection enforcement, assigning chartering authority to the OCC and specific consumer protection enforcement authority to the CFPB,” Brooks said.

The protections implemented following the last financial crisis “put two cops on the beat and separated those responsibilities so neither would be compromised in service to the other,” he said. “That dynamic should be preserved so that the CFPB continues to enforce compliance with enumerated financial consumer protection laws for the financial companies designated by the Dodd-Frank Act, while at the same time avoiding the creation of a prudential supervision gap that could lead to serious safety and soundness risks.”

The report by the CFPB Taskforce on Federal Consumer Financial Law, harkening back to recommendations of the 1968 panel that served as the model for the task force, recommended that the bureau be authorized to grant charters to non-depository fintech companies, payment processors, and other financial service providers that operate in inherently interstate markets. It also recommended that Congress consider “the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of FinTech companies engaged in money transmission.”

The task force report, released Tuesday, is considered likely to be a nonstarter with the incoming Congress, which will be controlled by Democrats.

Sen. Sherrod Brown (D-Ohio), likely the incoming chairman of the Senate Banking Committee, blasted the report as well as the make-up of the task force itself, describing the panel as “rife with bias and with conflicts of interest.”

“This Taskforce provided the Trump administration with a report that fulfills its pro-Wall Street, deregulatory agenda, but it is neither credible nor legitimate,” Brown said. “Congress can and should give no weight or consideration to this propaganda masquerading as independent, agency research.”

Acting Comptroller of the Currency Issues Statement on CFPB Task Force Study Regarding Federal Fintech Charters