On September 13, the Conference of State Bank Supervisors (CSBS) filed its response to the OCC’s motion to dismiss a lawsuit brought against the agency, which challenged its statutory authority to create a special purpose national bank (SPNB) charter for fintech companies. As previously discussed in InfoBytes, the OCC argued in its motion to dismiss that the CSBS lawsuit was premature because the agency has not reached a decision on whether it will make SPNB charters available to fintech companies or other nonbank firms. The OCC further asserted that under the National Bank Act (NBA), its interpretation of “the business of banking” deserves Chevron deference. In its response, CSBS disagreed and argued that in December 2016 the OCC “formally announced” its decision to begin chartering nonbanks, and that with the publication of a supplement to its Licensing Manual—which both stated its authority to issue SPNP charters to “institutions that neither take deposits nor are insured by the [FDIC]” and “invited interested parties to initiate the application process”—the OCC “crystalized its position.”

In addressing other issues raised by the OCC in support of dismissal of the lawsuit, CSBS argued that:

  • CSBS has sufficient injury for standing because the OCC’s decision to grant charters interferes with states’ sovereignty and the ability to oversee and enforce state licensing and consumer protection laws;
  • the court must test the underlying legal premise, which is that the “OCC lacks the requisite statutory authority under the [NBA] to encroach upon the regulation of nonbanks by issuing national bank charters to institutions that do not take deposits, and therefore do not engage in the ‘business of banking’” because “there is no point in either [the] OCC or its charter applicants devoting resources to ultra vires charters that will be invalidated”;
  • the OCC’s position that CSBS has “failed to state a claim” concerning the interpretation of the “business of banking” is unsupported, and the court “must consider the statutory context of the term, including a regulatory regime that encompasses not only the NBA, but also other federal banking statutes” to conclude that the “business of banking” necessarily includes the taking of deposits; and
  • if the OCC seeks to expand its authority “into areas traditionally occupied by states, courts require a clear showing that Congress, acting through the agency, has approved such a result”—which the OCC has not shown.