Last week, Acting Comptroller of the Currency Keith Noreika told the audience during an address in Washington, D.C., that he thought regulating nonbanks through a federal fintech charter was “a good idea.”
Noreika, a Trump administration appointee, defended the OCC’s right to establish the charter championed by his predecessor, Obama appointee Thomas Curry, despite states’ claims to the contrary.
As PaymentFacilitator.com has previously reported, the special purpose national bank charter could be beneficial to some payment facilitators, depending on their business model and what they are hoping to accomplish.
The topic of Noreika’s address was the OCC’s initiatives for supporting responsible innovation.
“As bank supervisors, part of our job is to find that balance where supervision ensures safety, soundness, and compliance while not creating unnecessary regulatory burden or creating an environment so risk averse that banks fail to meet the financial and credit needs of their customer,” Noreika told the audience at a meeting of the Exchequer Club, a forum for discussing economic and financial policy.
While he indicated that minimizing unnecessary regulation was a priority of his, he also expressed his support for a strong federal banking system.
He said that he is often asked for his feelings on granting national bank charters to fintech companies.
In response, he said the charter is a “good idea that deserves the thorough analysis and the careful consideration we are giving it.”
He also acknowledged that the business of banking is evolving.
“On principle, companies that offer banking products and services should be allowed to apply for national bank charters so that they can pursue their businesses on a national scale if they choose, and if they meet the criteria and standards for doing so,” he said.
Noreika noted that a national charter would create a level playing field, requiring fintech companies to abide by the same rules that govern national banks.
Today, he said, “Hundreds of fintechs presently compete against banks without the rigorous oversight and requirements facing national banks and federal savings associations.”
Noreika also addressed questions over the federal government’s right to regulate fintech companies, saying that the agency plans to defend its authority to do so “vigorously.”
The Conference of State Bank Supervisors (CSBS) filed a complaint against the agency in April, calling its attempt to create a national charter “unlawful.” And the New York Department of Financial Services filed a similar lawsuit in New York federal court in May.
Noreika concluded by saying, “the agency, and my predecessor, Tom Curry, deserve significant credit for changing the conversation about financial innovation and fintech. It is progress when our agency’s consideration of its options spurs actions by others to explore ways innovation and fintech can make banking better and improve services to customers.”