CSBS Issue Briefings - August 2020

• The states oversee companies responsible for $1.4 trillion in annual payments, encompassing small brick-and-mortar companies to large internationally active corporations, moving billions of dollars • Through Vision 2020, states are using tech tools to better supervise a variety of nonbank institutions, including fintechs • A national bank charter for institutions that do not take deposits exceeds the OCC’s statutory authority • Congress defines a bank as an institution that takes deposits; a bank can also make loans or process payments, but the deposits function is not optional • A fintech charter would distort and harm the marketplace by arbitrarily picking winners and losers • Taxpayers would be exposed to a new risk: failed fintech • A federal court has determined the OCC lacks authority to grant a bank charter to an entity that does not take deposits • The New York court decision applies to lending and/or payments and has nationwide applicability • There is no difference between t he OCC’s proposed fintech charter and its new payments charter proposal; both are invalid because the OCC does not have the authority or power to define a bank • The last time the OCC pre-empted state consumer protection laws in a sweeping manner--the early 2000s--predatory lenders were let off the hook and contributed to the largest number of home foreclosures since the Great Depression • State regulators support market competition and innovation while ensuring that businesses are locally accountable and that consumers are protected

Talking Points

SME Contact: Margaret Liu, Sr. VP, Legislative Policy & Deputy General Counsel: (202) 728-5749 or MLiu@csbs.org

Date Updated: 8/20/2020

FOR STATE REGULATOR USE ONLY