Today the Office of the Comptroller of the Currency has announced “Exploring Special Purpose
National Bank Charters for Fintech Companies” . The details of the announcement can be found here.
Brian Korn, attorney at Manatt, Phelps & Phillips, LLP , has shared with us the following thoughts on this special purpose charter that are relevant for the recent fintech charter comment request related to marketplace lenders:
Brian Korn says:
- “Is the charter optional? He assumes a company can continue to use third-party lenders like banks or obtain state licenses or do without a license if not required.”
- “Can they get access to Fed discount window? Can they pick a state and use the usury limits of that state? “
- “Madden would not apply if the loan is held by a national bank. True lender would not apply either since the fintech firm would itself be a “non-depository bank.””
- “It must be fully-preemptive- states are going to fight this harder than the Reg A tier 2 preemption because it effectively puts the Cal DBO, NYS DFS, and other agencies out of business, depending on cost and user friendliness.”
- “Short comment period- Jan 15. I expect this gets extended, but don’t see soon-to-be Treas. Secretary Mnuchin fighting this too hard, unless Goldman is against it because they went and obtained a NY State license.”
- “Time to obtain a charter, review requirements, and capital requirements are all TBD. If they are too high, fintech will not bite. Fintech will always opt for the regulatory path of least resistance, all other things including enforcement risk being equal.”
- “Curry notes that federal banking laws apply to banks generally- other than FDIC compliance which exempts from CRA. It would be difficult for most fintech firms to comply with the Reg W affiliate requirements without significant restructuring. Platforms should be prepared to fully comply with federal banking laws, including strict affiliate transaction prohibitions”
- “Curry’s term expires in April 2017. A new Comptroller will have to bring this to life.”
We look forward to more in-depth analysis in the coming days. In all cases, we look forward to this step in the right direction which adds another regulatory path for marketplace lenders.