Financial Industry Alert | August.02.2018
On July 30, the U.S. Department of the Treasury ("Treasury") and the Office of the Comptroller of the Currency ("OCC") provided important guidance on a broad range of issues confronting the fintech industry. Treasury released a long-awaited report titled A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation (the "Treasury Report").
Following a specific recommendation in the Treasury Report, the OCC formally announced that it would begin to accept applications for special purpose national bank charters, and it provided guidance on the procedures and standards that would govern such applications through the issuance of a Licensing Manual Supplement for Special Purpose National Banks (the "Manual Supplement"). Taken together, the Treasury Report and the OCC announcement reinforce the commitment of the federal government to promote the growth of the fintech industry.
The Treasury Report
The Treasury Report is the fourth in a series of four reports addressing the federal government's approach to financial regulation. In particular, the Treasury Report addresses the role of nonbanks in the U.S. economy, with a particular focus on how fintech companies have used new technology to deliver financial services to U.S. consumers and businesses. The Treasury Report takes firm positions on many legal and regulatory issues affecting the fintech industry, and includes concrete policy recommendations designed to address these issues.
The Treasury department's views on both of these issues represent the clearest indication to date of the federal government's position on the viability of the bank partnership model.
The OCC Announcement
Immediately following the release of the Treasury Report, the OCC announced that it would proceed with its intention to accept applications for special purpose national bank charters. It also issued the Manual Supplement setting forth the application standards and process for obtaining a special purpose national bank charter. As stated by the OCC: "This Supplement applies specifically to the OCC's consideration of applications from fintech companies to charter a special purpose national bank that would engage in one or more of the core banking activities of paying checks or lending money, but would not take deposits and would not be insured by the Federal Deposit Insurance Corporation." We previously addressed potential issues raised by such special purpose bank charters here.
As always, we would be happy to discuss any issues or questions you may have arising from these key developments.