On March 9, 2021, the Second Circuit heard oral arguments in connection with the New York Department of Financial Services’ (“DFS”) challenge to block the Office of Comptroller of the Currency’s (“OCC”) special purpose national bank charter (“fintech charter”). The lawsuit was filed in the Southern District of New York in September of 2018, shortly after the OCC made available its special purpose bank charter.
The fintech charter would allow certain non-depository fintech companies to operate as “special purpose national banks” under the National Bank Act (“NBA”), which is overseen by the OCC without the burden of state-by-state regulation and licensing. The OCC views deposit-taking as just one of the activities undertaken by banks in the “business of banking” under the NBA. However, critics, including the DFS, argue deposit-taking is essential to the “business of banking,” which should preclude non-depository fintech companies from obtaining national bank protections.