Shearman & Sterling | Fintech 2020 | Court Rejects CSBS Suit Over OCC FinTech Charter
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  • Court Rejects CSBS Suit Over OCC FinTech Charter
    Last week, Judge Dabney Friedrich of the U.S. District Court for the District of Columbia dismissed a lawsuit brought by the Conference of State Bank Supervisors (CSBS) that would have prevented the Office of the Comptroller of the Currency (OCC) from offering a special purpose national bank charter (or “FinTech charter”) to certain non-bank financial services firms.  The CSBS brought the lawsuit in October 2018 following the OCC’s July 2018 announcement that it would begin accepting applications for the FinTech charter, arguing that the OCC lacks the authority to award bank charters to non-depository institutions.   However, Judge Friedrich concluded that the CSBS did not have standing to bring the suit given the fact that the OCC has yet to award a FinTech charter to any non-bank financial services firms.

    This was the second time that the CSBS has sued the OCC over its authority to offer the FinTech charter, although that case was also dismissed for lack of subject matter jurisdiction and ripeness.  Judge Friedrich, who also threw out the first case, argued that “not much has happened since [the first suit] that affects the jurisdiction analysis.”

    However, Judge Victor Marrero of the U.S. District Court of the Southern District of New York recently allowed a similar case brought against the OCC by the New York Department of Financial Services (NYDFS) to proceed.  Unlike Judge Friedrich, Judge Marrero argued that the case was “ripe for adjudication” and that New York’s sovereignty is threatened by the FinTech charter.  Judge Friedrich in her remarks claimed she respectfully disagreed with his decision. 

    The OCC has yet to receive any applications for the FinTech charter since its announcement, which seems to be due in part to looming uncertainty surrounding the pending lawsuits.  It is unclear if we will see any applications until the pending NYDFS litigation is resolved, or if the CSBS may sue again following the first FinTech charter application or grant.