State banking regulators can't sue over a fintech charter that does not yet exist, the Office of the Comptroller of the Currency argued in court documents filed Friday.
The OCC has filed a motion to dismiss the lawsuit from state banking regulators who claim the federal banking agency overstepped its authority by introducing a special purpose national bank charter for nonbanks, or financial technology companies.
In its 52-page memorandum in support of dismissing the case, the OCC claims it is well within its authority to grant such a charter. But the OCC focused its opposition on the argument that the Conference of State Banking Supervisors, which filed the suit on April 26, allegedly failed to show harm to itself or its members.
Fintech companies have widely come out in support of a special purpose charter that could allow fintechs to be regulated on a federal level without having to deal with 50 state regulators and comply with individual banking regulations on a state-by-state basis. A draft charter was proposed in March and the agency took public comments, though nothing has been finalized.
The OCC stated in the Friday filings that "a plaintiff must allege 'an injury in fact a harm suffered by the plaintiff that is concrete and actual or imminent, not conjectural or hypothetical,'" which the agency believes state regulators have not done.
The response goes on to call the state regulators' claims of harm "vague, future-oriented and speculative."
In the OCC's memorandum, it states: "The OCC has yet to take any relevant action that could have a concrete effect of any kind. No tangible effect on CSBS or CSBS' members could even arguably occur until a [special purpose national bank charter] has been issued to a specific applicant. This has not happened."
"Each of the OCC's public statements in 2016 and 2017 identified in the complaint were part of ongoing policy development that has not yet become final," the filing continued.
The OCC claimed that its "actions" referred to in the CSBS's original complaint "are, at bottom, nothing more than a collection of non-final policy papers and solicitations for input from the public that ... do not represent a 'final agency action.'"
Margaret Liu, senior vice president and deputy general counsel for CSBS, emailed a statement Friday afternoon in response to the federal banking agency's motion to dismiss. "We maintain that the OCC lacks the legal authority to unilaterally expand its authority to issue its proposed fintech charter," she wrote. "We remain confident that view will prevail. We remain deeply concerned about the impact on the marketplace, risks to taxpayers and the harm that would be caused for consumers through pre-empting stronger state consumer financial-protection laws."