Federal Court in New York Finds in Interim Decision Against OCC FinTech Charters

In an order dated May 2, 2019, the U.S. District Court for the Southern District of New York found that certain claims brought by the N.Y. Department of Financial Services (the “DFS”) that the Office of the U.S. Comptroller of the Currency (the “OCC”) does not have the authority to issue charters to non-depositary fintech entities could go forward.  In Vullo v. the OCC, the DFS argued that the National Bank Act (the “NBA”) vest the OCC with authority to charter national banks that receive deposits.  Under its regulations, the OCC can issues special purpose charters to fintech companies that do not take deposits.  The court not only rejected the OCC’s Motion to Dismiss, but indicated that there is a good chance that the DFS will succeed in overturning the OCC attempt to issue fintech charters.  The court noted that while the NBA allows the OCC to charter deposit-taking banks, states are left to regulate non-depositary financial institutions.