On October 25, 2018, the Conference of State Bank Supervisors (“CSBS”) filed a complaint in the United States District Court for the District of Columbia to stop the Office of the Comptroller of the Currency (“OCC”) from issuing special purpose national bank charters to fintech companies.  The lawsuit follows a similar suit against the OCC by the New York State Department of Financial Services (“DFS”) in the United States District Court for the Southern District of New York, which we discussed in September.

Like DFS, the CSBS alleges that the OCC lacks statutory authority to charter special purpose national banks that do not issue deposits, other than those non-depository companies specifically enshrined in federal law, such as trust companies.  Unlike DFS, the CSBS further alleges that the OCC acted in an arbitrary and capricious manner under the Administrative Procedure Act in implementing the special purpose fintech charter program, by failing to consider the implications of the program sufficiently and failing to offer an adequate explanation for its actions.

The CSBS brought suit against the OCC on similar grounds in April 2017.  The district court dismissed that case in April 2018 on the grounds that the OCC had not yet made a firm determination as to whether to issue fintech charters, and therefore that the issues were not yet ripe for adjudication.  In July 2018, the OCC announced that it would begin accepting special purpose charter applications from fintech companies.

Tags: Administrative Law, Conference of State Bank Supervisors, CSBS, Fintech, Fintech Charters, national bank, New York DFS, NY DFS, NYDFS, OCC, Office of the Comptroller of the Currency, Special Purpose Charters
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Photo of Randy Benjenk Randy Benjenk

Randy Benjenk is a partner in Covington’s industry-leading Financial Services Group and focuses his practice on regulatory advice and advocacy. He represents domestic and foreign banks, fintech companies, and trade associations on compliance issues, corporate transactions, and public policy matters.

Chambers USA says…

Randy Benjenk is a partner in Covington’s industry-leading Financial Services Group and focuses his practice on regulatory advice and advocacy. He represents domestic and foreign banks, fintech companies, and trade associations on compliance issues, corporate transactions, and public policy matters.

Chambers USA says Randy has received “widespread praise” from clients, who describe him as “excellent” and say that “the quality of his legal work and his writing abilities were incredible” and “he’s very easy to work with, knowledgeable and efficient.”

Randy regularly advises clients on a wide range of regulatory matters, including:

  • Bank Activities and Prudential Regulation. Complex bank activities, structure, licensing, and prudential matters, often involving issues of first impression at the federal and state banking agencies.
  • Corporate Transactions. Mergers and acquisitions, spinoffs, charter conversions, debt and equity issuances, investments, strategic partnerships, de novo bank formations, and related regulatory applications and disclosures.
  • Private Equity Investments. Private equity investments in banks, bank investments in private funds, and fund structuring related to the Volcker Rule and Bank Holding Company Act.
  • Public Policy Matters. Regulatory and legislative policy matters, with an emphasis on changes arising out of U.S. banking legislation and international standards.
  • Crisis Response. Navigating extraordinary events, such as the COVID-19 pandemic and related governmental responses, and firm-specific matters.
  • Supervisory and Enforcement Matters. Compliance and safety and soundness issues that arise in the examination and enforcement contexts.
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