A body of U.S. state banking regulators on Thursday sued the federal government to void its decision to award national bank charters to online lenders and payment companies, saying it was unconstitutional and puts consumers and taxpayers at risk.
The Conference of State Bank Supervisors (CSBS) said it had filed a complaint in the U.S. District Court for the District of Columbia against the Office of the Comptroller of the Currency (OCC) over its plan, announced in July, to issue bank charters to financial technology firms.
Üyor Common sense and laws tell us that a non-bank bank is not a bank. CSBS, therefore, calls the courts to stop the illegal and generous expansion of powers by the OCC, yas said CSBS President and CEO John Ryan.
Fintech companies have made a lot of effort to allow national bank regulations to operate nationwide without license in every state. This is a process that prevents growth and increases costs.
Bryan Hubbard, a spokeswoman for the OCC, said the organizer relied on its legal authority to issue national bank statutes that would offer additional options for firms in addition to state licenses. He also objected to the claim that CSBS claimed that state consumer protection laws could apply to fintech companies that secured the federal OCC license.
Hubbard said, tahs Anti-discrimination, fair lending, and state laws addressing debt collection will also be applied to private national banks. Hub Gibi State laws, which prohibit unfair or deceptive acts or practices that address material misstatements and omissions related to products and services, are also generally applicable to national banks. “
The new CSBS case following a similar case submitted by the New York Financial Services Department (NYDFS) last month will further complicate the efforts of the OCC to proceed with the charter.
Several fintech companies told Reuters that they would be cautious about applying for an OKC license in August and that legal challenges were not resolved.
CSBS and NYDFS have previously filed charges against the OCC in 2017, but were rejected by the court.
CSBS and NYDFS are calling for a new court action as a result of the OCC’s statement in July that it will begin accepting license applications from fintech companies.
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