Rep. Gregory W. Meeks Expresses Cautious Optimism in Light of the OCC’s Decision on Fintech Charter
Washington, DC - Yesterday, the Office of the Comptroller of the Currency (OCC) clarified its position on nonbank financial institutions obtaining national charters. Nonbank firms that are eligible for OCC charters include those engaged in the business of banking, including "fintech" firms that either receive deposits, pay checks, or lend money. Since 2016, Rep. Gregory W. Meeks – a senior Member of the House Committee on Financial Services – has pushed the OCC to establish high consumer protection standards for nonbanks that receive a national charter, as well as require strong financial inclusion commitments similar to those that apply to banks under the Community Reinvestment Act. In response to the OCC's announcement, Congressman Meeks stated the following:
"I remain cautiously optimistic about the OCC's plans to grant charters to fintech firms and other nonbanks. As the financial services industry evolves with technology, so should our banking policies. The OCC's work in this space, which began under the Obama Administration, is critical to ensuring that the new wave of financial services providers are regulated similarly to traditional banking institutions.
"With every change comes unintended risks. My chief concerns – as stated in the past – are (1) the potential for bad actors to enter the national banking system through a special purpose charter, and (2) the potential for firms to exclusively provide their services to the most affluent of consumers. We have state and federal laws to prevent such behavior among banks and the same should be the case for nonbanks, especially if they receive nationwide interest rate exportation rights through a national charter.
"Accordingly, I welcome the OCC's plan to retain its financial inclusion requirements for nonbank firms should they receive a charter. This is something I recommended under the Obama administration and will continue to fight for.
"Furthermore, I applaud the OCC for definitively stating that firms who pose potential risks to consumers or offer predatory, unfair, or deceptive products or services will not be approved. This statement is a step in the right direction.
"Nonetheless, policy statements are one thing, and actual implementation is another.
"I will remain vigilant in my oversight to ensure that the benefits of a national charter do not extend to firms that offer unreasonably high interest rate loans to consumers that have demonstrated no ability to repay, including payday lenders who should remain regulated on the state level. For implementation to go right, the OCC must continue to engage Congress, its fellow banking agencies, and state regulators to implement a more modernized chartering policy in a way that does not pose risks to financial consumers or our financial system."