Licenses and charters

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The push to revive the District charter began in 2001, nearly 40 years after the original rule was repealed and CUs there adopted the federal charter.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

In signing off on deposit insurance for the payments giant and student loan servicer, the FDIC sanctioned the first new industrial loan companies in over a decade.

On the same day the Federal Deposit Insurance Corp. said it will soon rule on two applications, the agency also proposed benchmarks for all firms that want to own industrial loan companies.

A decision by regulators on how to move forward with the controversial charter could have broad implications for fintech firms that want to enter the banking system.

As part of a review, the agency said it had identified requirements dealing with operating subsidiaries, noncontrolling investments by banks and other corporate activities that were no longer necessary.

LendingClub and Varo Money are making inroads into the traditional financial system, but other fintechs still face long odds.

LendingClub and Varo Money are making inroads into the traditional financial system, but other fintechs still face long odds.

Wells Fargo appears to be outpacing its rivals in the API race; CFPB's unexpected showdown with Citizens; Varo gets vital FDIC OK for bank charter; and more from this week's most-read stories.

The entire banking industry needs to join the fight instead of waiting for Congress to act.

The agency released two new manual supplements and other materials to help nonbanks and its own staff better understand application procedures.

With fintech firms seemingly stuck in neutral in their efforts to gain banking charters, alternative state licensing options could get another look in 2020.

With fintech firms appearing stuck in neutral in their efforts to seek bank charters from federal regulatory agencies, observers say state licensing options could be in vogue again in 2020.