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.
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.
