Press reports indicate that, in a press call last week regarding the Office of the Comptroller of the Currency’s (OCC) new risk report, “Semiannual Risk Perspective for Spring 2018,” Comptroller of the Currency Joseph Otting commented that the OCC anticipates announcing its decision in July 2018 on whether it will proceed with issuing SPNB charters to nondepository fintech companies. As we have previously reported, Mr. Otting has not yet taken a public position on the OCC’s SPNB charter proposal. Comptroller Otting reportedly stated that “the honest answer is we haven’t decided” whether to use the OCC’s authority to issue fintech charters.
Comptroller Otting also reportedly observed in the press call that some prospective applicants for a SPNB charter have lost interest after learning more about the charter process and now seem more focused on forging bank partnerships. The OCC’s views on partnerships between banks and nonbanks should continue to be closely monitored going forward. Comptroller Otting reportedly expressed skepticism and concern during the press call about “rent-a-charter” arrangements between banks and non-bank entities. Mr. Otting was quoted by one media source as having said “we don’t believe that institutions should effectively lend their charter to a vendor.” We also note that in its bulletin issued last week on “Core Lending Principles for Short-Term, Small-Dollar Installment Lending,” the OCC articulated an unfavorable view of partnerships between banks and nonbanks with the sole goal “of evading a lower interest rate established under the law of the entity’s licensing state(s).” The context of the OCC’s view was directly tied to short-term, small-dollar installment lending, but this may signal increased regulatory scrutiny of all banks (both state- and federally-chartered) that partner with third parties, including fintech companies, to make loans under Section 85 of the National Bank Act.
Stay tuned for further developments!