The conference of the supervisory authorities of the state banks escalates its multi-year struggle with the office of the currency auditor over the goal of the agency to issue charters to fintech companies.
The group filed a complaint against the OCC in the U.S. District Court for the District of Columbia, opposing the unique charter application from Figure Technologies, a San Francisco-based fintech.
The CSBS complaint argues that Figure's offer to open a bank that will not accept federally insured deposits is "just a barely veiled effort" to avoid the legal controversy surrounding the OCC's special fintech charter, the has been involved in legal challenges since its inception.
"Since Figure intends to continue banking without taking out FDIC insurance, Figure has applied for a non-bank charter," the group said in the complaint filed on Tuesday.
The special fintech charter was first announced by the OCC in 2016, but no company has officially applied for it. It would enable fintech companies without a custody account to operate under a federal charter monitored by the OCC, without the burdens of government regulation and licensing. The New York State Treasury Department challenged the proposed charter in court last year and won. The OCC appealed in April.
"[Figure] 's plan to become a national bank without taking out deposit insurance is an illegitimate attempt to dodge the controversy surrounding the Fintech Charter and the federal court decision that invalidated it," said John Ryan, president and CEO of the Conference of State Bank Supervisors.
The CSBS states in its complaint that the OCC has gone beyond its legal authority to charter institutions that do "banking" and require an institution to receive deposits and obtain insurance from the Federal Deposit Insurance Corp. complete. The group maintains that states regulate fintechs better than national agencies.
Figure, currently offering home equity financing for credit and mortgage refinancing loans, plans to raise uninsured deposits greater than $ 250,000 in lieu of FDIC insured deposits. As of 2018, Figure has been monitored by state regulators in 49 states and the District of Columbia as a mortgage lender, consumer lender, or debt collection agency.
Since Figure does not seek deposit insurance, the CSBS essentially regards its charter application as being for the fintech charter.
"In close collaboration with the OCC and Acting Comptroller Brooks, Figure is on the verge of receiving a non-banking charter that it claims will allow it to carry out the same activities without a government license or regulatory oversight," the CSBS said in its complaint.
If successful, industry insiders see it as a way for tech companies to obtain national bank charter from the OCC.
Figure's "plan to become a national bank without taking out deposit insurance is an illegitimate attempt to dodge the controversy surrounding the fintech charter and the federal court decision that invalidated it," said John Ryan, president and CEO of Banking Regulatory Group, in a press release: "If the OCC were allowed to create a special purpose non-banking charter, it would redefine our entire banking system, creating new systemic risks and setting a dangerous precedent for any federal agency beyond its legal limits can act. "
The CSBS has sued the agency twice over the past few years over the special fintech charter, but both times the case was dismissed because no companies have yet received a charter.