Licenses and charters

Acting Comptroller of the Currency Brian Brooks and Department of Financial Services Superintendent Linda Lacewell stuck to opposing scripts on whether federal or state regulators are best equipped to protect consumers and supervise new entrants into the banking system.

In a sharp escalation of the battle over the future of the dual banking system, the acting chief of the Office of the Comptroller of the Currency suggested that states should defer to federal authority in supervising global money transmitters.

Backers of lawsuits challenging federal charter and interest rate policies for nonbanks say states are sticking up for consumer protection. Others say the legal quagmire could slow efforts to improve the regulatory framework.

The e-commerce leader’s return to the drawing board alleviates immediate concerns about its banking plans. But the company intends to reapply, and it will be harder for the industry to persuade policymakers to block industrial loan companies more broadly.

The Office of the Comptroller of the Currency is overstepping its authority in granting charters to fintechs and other companies that don’t take deposits.

Growing Oaks Federal Credit Union in Goldsby, Okla., plans to provide signature and auto loans initially and then expand into mortgages.

Just as legal limbo has threatened the agency’s long-running effort to create a fintech license, a charter unique to payments companies could face a court challenge, observers say.

The Conference of State Bank Supervisors, banking law scholars and consumer advocacy organizations filed amicus briefs siding with the New York State Department of Financial Services in its court battle with the federal regulator.

For too long, nonbanks have been allowed to form industrial loan companies to operate as banks without Fed oversight. This regulatory pass should not be given during a crisis.

Two trade organizations and a consumer group urged lawmakers to establish a three-year moratorium to block the charter bids of companies that they said were attempting to skirt regulatory requirements.

Seven trade groups said they would fight any effort by the agency to establish a tailored license for payments providers such as PayPal, Stripe and Square.

Small banks have long led the campaign against industrial loan companies, arguing they can be used to violate the separation of banking and commerce. But now the industry’s heavyweights are also taking a hard line in response to an FDIC proposal that would give tech companies a smoother path into the lending business.

The Department of Financial Services is going live with DFS FastForward, which aims to help innovators in finance, healthcare and insurance consult directly with regulators on specific compliance issues.

Recent steps that would help nonbank lenders enter the traditional banking system, like a proposal clarifying the industrial loan company charter, are needed but face strong opposition.

Acting Comptroller of the Currency Brian Brooks says financial institutions are needed more than ever to “sustain existing businesses” and help entrepreneurs rebuild. Meanwhile, reforming the Community Reinvestment Act, he says, can “unblock opportunities” in minority neighborhoods.

Recent steps that would help nonbank lenders enter the traditional banking system, like a proposal clarifying the industrial loan company charter, are needed but face strong opposition.

The push to revive the District charter began in 2001, nearly 40 years after the original rule was repealed and CUs there adopted the federal charter.

The Conference of State Bank Supervisors says parts of the plan are an overreach, while the agency should think twice about developing the proposal during the coronavirus pandemic.

Cobalt Credit Union is currently a state-chartered institution but is looking to once again become a federal one because of Iowa state taxes.

The company's plan had drawn strong criticism from bankers about Rakuten's potentially controlling an industrial loan company while engaging in its nonfinancial businesses.