An opinion piece in TheHill regarding the development of a new banking charter category for fintech organizations was penned by Richard Hunt, president and CEO of the Consumer Bankers Association. The opinion expressed and the suggestion made was not to stop moving forward with the idea, but to be thoughtful about what the creation of a special charter will solve and what oversight by the OCC will provide.
To facilitate the next generation of banking, it is imperative the OCC take the time to make sure its new Office of Innovation attains the right level of knowledge and expertise before incorporating FinTech companies into the federal banking system.
While expanding the scope of companies eligible for a national bank charter would be good for competition, the OCC’s approach presents a few problems.
What the OCC is proposing to do as outlined broadly in their white paper, “Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective”, is to provide a single point of oversight for fintech organizations which helps to clarify the rules of the road, but the OCC is proposing to have oversight of a range of businesses:
Per the white paper, it appears companies with vastly different business models, like payday lenders, marketplace lenders, and peer-to-peer payment companies, could all be eligible for the OCC’s proposed FinTech charter.
What also isn’t entirely clear is where the OCC’s purview would end and where the CFPB oversight would begin.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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