Judge Dismisses Challenge To OCC’s Plan For Fintech Charters, But Challenge Will Likely Return

NEW YORK—A challenge to a proposed federal charter for financial technology firms was dismissed this week, with a federal judge ruling that New York's top financial regulator's case was speculative, because the Office of the Comptroller of the Currency has not finalized its plans for the charter.
The New York Department of Financial Services sued the OCC in May over plans for creating a special purpose national charter for fintech firms, arguing that the national bank supervisor did not have the authority to issue such a charter. The OCC would allow nationally chartered fintech firms to operate in New York without complying with the state’s usury cap and other consumer financial regulations, the complaint said, according to Law 360.
But U.S. District Judge Naomi Reice Buchwald ruled that the Department of Financial Services did not have grounds to bring its complaint against the OCC, because the federal regulator had not yet officially decided to issue the fintech charters, Law 360 reported.
“These alleged injuries will only become sufficiently imminent to confer standing once the OCC makes a final determination that it will issue [special purpose national bank] charters to fintech companies. In the absence of a ‘Fintech Charter Decision,’ DFS’ purported injuries are too future-oriented and speculative to constitute an injury in fact,” she wrote, according to Law 360.
   
Judge Buchwald added that it was unclear whether the OCC would elect to do so under the leadership of new Comptroller Joseph Otting, who was confirmed to his post last month. Otting has not yet made any public pronouncements about the fintech charter, but his predecessors have publicly stated the OCC has the authority to issue fintech charters under the National Bank Act, Law 360 reported. 
Law 360 reported that New York Superintendent of Financial Services Maria T. Vullo said in a statement that she appreciated Judge Buchwald’s “careful consideration” of her agency’s case, and reiterated the state’s case against the potential OCC charter.
“As we have asserted, the OCC lacks the authority to issue fintech charters under the National Bank Act, an issue the court did not reach,” she said.
But, because Judge Buchwald dismissed the state financial regulator’s suit without prejudice, it would be able to sue again if the OCC elects to bring forward a special national charter for fintech firms, Law 360 noted.