New York is suing the US over a decision to permit US financial technology firms to apply for national bank charters, blasting it as “lawless” and “ill-conceived”. Maria Vullo, superintendent of New York’s Department of Financial Services, filed the suit against the Office of the Comptroller of the Currency (OCC) in a Manhattan federal court.
The controversial July 31st decision, which has been the target of two prior lawsuits, allows companies (ranging from payment services like Square and Venmo to online lenders and crypto currency exchanges) the status and privileges of a “national bank”. That way, claim advocates, they can overcome the state regulatory framework currently stifling fintech innovation. On the flip side, critics of the OCC charter claim it could protect fraudulent companies from proper state oversight.
Fintech firms have long pushed for national bank charters to let them operate nationwide without needing licenses in every state, a process they say can impede growth and boost costs. Read more