On May 2, 2019, Judge Victor Marrero of the U.S. District Court of the Southern District of New York denied two of three counts of the OCC’s Motion to Dismiss New York State’s challenge to the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). Judge Marrero found that the New York State Department of Financial Services’ (“NYDFS”) challenge was ripe because the OCC has publicly announced that it has met with hundreds of Fintechs and is soon expecting a Fintech Charter application—thereby denying the OCC’s argument that a charter must first be granted for there to be standing. Judge Marrero also found that the NYDFS’ arguments that the OCC exceeded its authority under the National Bank Act had merit. The judge did, however, grant the OCC’s Motion to Dismiss on the count challenging the charter on Tenth Amendment grounds. As a result, the NYDFS litigation may proceed.
As previously noted, these continued legal challenges create legal, regulatory, and strategic risk that must be taken into account by those Fintechs considering whether to apply for a Fintech Charter or to remain regulated on a state-by-state basis. Related litigation remains pending in the U.S. District Court of the District of Columbia in an action brought by the Conference of State Bank Supervisors against the OCC (CSBS v. OCC, No. 1:18-cv-02449 (D.D.C.)).