Exclusive: Warren presses OCC to revoke United Texas Bank charter

• Key insight: Senate Banking Committee Chair Elizabeth Warren, D-Mass., argues that the OCC inappropriately greenlit United Texas Bank's conversion to a national bank charter despite an active anti-money laundering cease-and-desist order, which she said is a violation of the Dodd-Frank Act.
• Expert Quote: "Granting United Texas Bank a national bank charter sets a dangerous precedent that gives other banks the green-light to convert their charters to the lowest common denominator regulator rather than fix the serious issues that may put the U.S. financial system at risk." — Sen. Elizabeth Warren, D-Mass.
• Forward look: Warren is urging the OCC to reverse course on approving the bank's national charter and answer a number of questions by Aug. 20 explaining the basis for the approval.

Sen. Elizabeth Warren, D-Mass., on Friday pressed the Trump Administration's top bank regulators over their decision to allow United Texas Bank to convert from a state-chartered bank to a national bank even as it was under an active anti-money laundering enforcement action. 

In a letter sent Wednesday to Federal Reserve Vice Chair for Supervision Michelle Bowman and Comptroller Jonathan Gould and obtained by American Banker, Warren — who serves as ranking member of the Senate Banking Committee — argued the approval violated the intent of Section 612 of the Dodd-Frank Act, which generally prohibits banks from changing their primary federal regulator while operating under a formal enforcement order. She called on the OCC to revoke the bank's national charter, arguing the agencies had opened the door to "charter shopping" by troubled institutions.

"Granting United Texas Bank a national bank charter sets a dangerous precedent that gives other banks the green-light to convert their charters to the lowest common denominator regulator rather than fix the serious issues that may put the U.S. financial system at risk," Warren wrote. "Considering that crypto technologies make legal enforcement against money laundering more difficult, allowing a bank that is already facing BSA/AML compliance issues to grow this business model poses significant risk to the financial system."

The letter comes at a time when the regulators have encouraged a wave of charters and narrowed anti-money laundering regulations banks face. Congress adopted Section 612 of Dodd-Frank after the 2008 financial crisis to prevent banks from changing charters in an attempt to seek more permissive regulatory obligations. 

The clause generally prevents a state bank from changing its primary federal regulator while subject to a formal enforcement action. In November last year, United Texas Bank petitioned the OCC to convert to a national bank charter; the agency approved the conversion in May this year on the condition that the bank enter into a new cease-and-desist order once the conversion was final. 

The bank completed the conversion in June and the OCC issued the new order four days later, requiring United Texas Bank to continue addressing the anti-money laundering and Bank Secrecy Act deficiencies identified in its prior enforcement action and carrying forward requirements related to board oversight, compliance staffing, customer due diligence, suspicious activity monitoring, OFAC controls from a previous order the Texas firm reached with the Federal Reserve Bank of Dallas and the Texas Department of Banking in 2024.

Warren expressed concern with the move and noted regulators have established that exceptions to Dodd-Frank anti-charter shopping standards should be rare.

"The OCC approved the bank's conversion application, without Federal Reserve objection," Warren continued. "As the sole dissenter from the Federal Reserve's decision not to object, Governor Michael Barr highlighted that United Texas Bank's national bank charter approval raises serious concerns about its unresolved anti-money-laundering and terrorist-financing deficiencies."

Read more:

• Should a bank ever be liable when a customer gets scammed?
• OpenAI models' Hugging Face breach is a red flag for bankers
• The top-performing banks with $2B to $10B of assets in 2025
• Inside Upstart's journey to get a bank charter approval

The letter also raises concerns about the bank's growing focus on digital assets and stablecoin-related banking, which present novel challenges for policing bank's anti-money laundering obligations. 

"Granting United Texas Bank a national bank charter sets a dangerous precedent that gives other banks the green light to convert their charters to the lowest common denominator regulator rather than fix the serious issues that may put the U.S. financial system at risk," Warren wrote. "Worse, the decision comes as the Fed, OCC, and FDIC have rolled back key regulations and weakened our financial system, and it highlights the deficiencies in the OCC's process for reviewing charter applications as it has already improperly granted a slew of national trust charters to seemingly ineligible cryptocurrency companies."

The letter argues "OCC should immediately revoke United Texas Bank's national bank charter" and directs the agencies to explain the legal and supervisory basis for approving the conversion, including what evidence United Texas presented for demonstrating progress toward its ongoing enforcement-related obligations. Warren also pressed the regulators for an explanation for why the OCC dropped corporate governance requirements from the more recent enforcement order. Warren asked for a response by August 20.