Spotlight on the Agency: OCC & Regulations on the Horizon

The Office of the Comptroller of the Currency (“OCC”) is an independent bureau of the U.S. Department of the Treasury[1] that charters, regulates, and supervises:

All National Banks

All Federal Savings Associations

Federal Branches and Agencies of Foreign Banks

The OCC ensures that all banks operating in the United States (both foreign and domestic) “run according to sound, safe practices and abide by all relevant regulations and laws. It also ensures that there is sufficient access to financial products and services and that customers are treated fairly.”[2]

 

As a result of the Dodd-Frank Act, the OCC merged with the Office of Thrift Supervision (“OTS”) in an effort to end lenders’ ability to shop regulators. Regulator shopping is the practice of banks/lenders picking and choosing amongst various state and federal regulators to find the most favorable rules and taxes. This merger saw the OCC take on supervision of 700+ institutions and gave the OCC rulemaking authority over national banks and federal thrifts.[3] Dodd-Frank also required the OCC to revise many of their rules on federal preemption of state law, limiting OCC authority. The agency is now required to determine preemptions on a case-by-case basis, which provides states with more power to protect consumers.[4]

 

Interesting things are coming from the OCC. The agency recently made a proposal to “grant special purpose national bank charters to fintech companies,”[5] which would allow the OCC to officially deem certain FinTech companies as “safe” and sufficiently compliant.[6] Keith Noreika, the new head of the OCC, recently commented that they are still in the “exploratory phase of this implementation.[7]

 

 

 

[1] “About the OCC” Office of the Comptroller of the Currency official website, https://www.occ.treas.gov/about/what-we-do/mission/index-about.html

[2] “What is the OCC?” Herold’s Financial Dictionary, https://www.financial-dictionary.info/terms/occ/

[3] Prior, Jon “OCC begins absorption of the OTS”, Housingwire, July 21, 2011, https://www.housingwire.com/articles/occ-begins-absorption-ots

[4] Williamson & Heimenz, “Preemption of State Consumer

Protection Laws: Dodd-Frank Changes and the New (Old) Barnett Standard” National Consumer Law Center, November 29, 2011, https://www.nclc.org/images/pdf/conferences_and_webinars/webinar_trainings/presentations/2011-2012/preemption_webinar_nov_2011.pdf

[5] Curry, Thomas J. “Exploring Special Purpose National Bank Charters for Fintech Companies”, December 2016, https://www.occ.treas.gov/topics/responsible-innovation/comments/special-purpose-national-bank-charters-for-fintech.pdf

[6] Milanovic, Nik, “An obscure regulatory debate has put the entire U.S. fintech community on edge” Techcrunch, April 24, 2017, https://techcrunch.com/2017/04/24/an-obscure-regulatory-debate-has-put-the-entire-u-s-fintech-community-on-edge/

[7] Irrera, Anna, “U.S. banking regulator not ready for fintech charter applications”, Reuters, September 13, 2017,  https://www.reuters.com/article/us-occ-fintech/u-s-banking-regulator-not-ready-for-fintech-charter-applications-idUSKCN1BO2SA