NYDFS steps up war of words with OCC over fintech charter plans
16 March 2017 | 4395 views | 0
New York's State Department of Financial Services (NYDFS) has re-ignited its war of words with the Office of the Comptroller of the Currency (OCC) over plans to offer bank charter status to qualifying fintech firms.
The State's latest intervention comes as the OCC issues a draft supplement to the agency’s existing Licensing Manual providing additional detail on its plans.
The release of the document comes just weeks after Comptroller Curry dismissed earlier criticism of its proposals from State regulators.
"To be clear, the National Bank Act does give the OCC the legal authority to grant national bank charters to companies engaged in the business of banking," Curry told a conference in New York. "That authority includes granting charters to companies that limit their business models to certain aspects of banking, and it is not circumscribed just because a company delivers banking services in new ways with innovative technology."
The OCC's actions have spurred the NYDFS to once again wade in, arguing that the imposition of an entirely new federal regulatory scheme will "invite efforts to evade state usury laws and other consumer protections, stifle small business innovation, create institutions that are too big to fail, and increase the risks presented by nonbank entities".
DFS further disputes the OCC’s claim that it has the authority under the National Bank Act, without Congressional authorisation, for the proposed new charter.
"Nonbank financial institutions are not national banks nor are they similar to the entities encompassed by the National Bank Act, states the body. "The proposal threatens to create an entirely new federal regulatory program, creating serious regulatory uncertainty that threatens to invade state authority and sovereignty. DFS already regulates money transmitters, check cashers, virtual currency exchanges, and other nondepository institutions to protect the public against money laundering, terrorist financing, and cyber threats."
The OCC says it received it received over 100 written comments to its original 2016 paper discussing issues associated with chartering fintech companies.
"The agency typically does not solicit comments on procedural manuals and supplements," it states. "However, consistent with its guiding principles of transparency and fostering open dialogue with stakeholders, the OCC will accept comments on this document through close of business April 14.