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Critics say the granting of fintech bank charters could
hurt startups and consumers. Advocates say it would
promote innovation and financial inclusion. A number
of financial analysts believe supporters and detractors
are separated by political fault lines, with Democrats and
state governments among the most vocal opponents.

Caution urged
In a letter to U.S. Comptroller Thomas J. Curry, U.S.
Sens. Sherrod Brown, D-Ohio, and Jeff Merkley, D-Ore.,
who serve on the Banking, Housing, and Urban Affairs
Committee, suggested the OCC's proposal could harm
consumers, stifle innovation and threaten financial
stability. They shared concerns about the paper's
language and "loosely defined" criteria.

"While we share your goal of ensuring that affordable
banking products are more accessible, we are concerned
with the OCC's proposal to expand its powers by
chartering non-bank institutions," they wrote. "Offering
a new charter to non-bank companies seems at odds
with the goals of financial stability, financial inclusion,
consumer protection, and separation of banking and
commerce that the OCC has upheld under your tenure."

The senators noted language in the OCC's proposal
goes beyond the scope of accommodating fintech firms
by including marketplace lenders, financial planners
and wealth management firms as potential recipients
of alternative nonbank charters. They added this runs
contrary to the OCC's narrowly defined authority "to
charter only three specific types of special-purpose
national banks" that do not accept deposits: bankers'
banks, credit card banks and trust banks.

New York State Financial Services Superintendent
Maria T. Vullo stated the OCC's proposal would bypass
state consumer protection laws and create "regulatory
arbitrage." New York's Department of Financial
Services is better equipped to regulate "cash-intensive
nonbank financial service companies" by providing
strict oversight and enforcing anti-money laundering,
consumer identification and transaction monitoring,
she stated.
Vullo's opinions are reflected in a Jan. 13, 2017, comment
letter to Comptroller Curry from the Conference of
State Bank Supervisors, representing 50 U.S. states,
the District of Columbia, Guam, Puerto Rico, and the
U.S. Virgin Islands. The CSBS feels the OCC would
be overstepping its authority by issuing a new type
of charter that would distort the financial services
marketplace and create uncertainty and risks pertaining
to government resources, while limiting the states'
ability to protect consumers.

Access to capital emphasized
Advocates see the granting of fintech charters as both
welcome and inevitable. Scott Talbott, Senior Vice
President of Government Affairs at the Electronic
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