Innovation Should Not Come at the Expense of Consumer Protection

The Center for Responsible Lending (CRL), The Leadership Conference on Civil and Human Rights, and the NAACP have sent a letter to Comptroller of the Currency Thomas J. Curry urging him not to offer national charters to financial technology firms, which could severely undermine state oversight and state laws that protect consumers and small business owners from abusive financial products and practices.

"We understand that the OCC seeks to expand financial inclusion and lead innovation through issuing non-bank charters to fintech institutions. However, we believe that if the OCC proceeds with granting a federal charter to fintech companies, the Agency will undermine the responsible regulatory framework that it purports to advance and in fact will do harm to consumers, not serve the public interest," wrote the group. "A federal non-bank special purpose charter for fintechs will undoubtedly weaken state-level consumer safety measures, and it is far from clear that the OCC has the legal authority to grant a charter to non-depository institutions absent Congressional authorization."

Non-bank lending is a breeding ground for costly, predatory lending practices. The CFPB and several states have already brought enforcement actions against these kind of lenders. OCC chartered institutions may be able to circumvent many state law, which could serve asa luring incentive for lenders to seek a national charterin the first place.

The OCC made its announcement to explore granting charters to fintech companies in December and has sought out comments by the public. Though the deadline to submit official comments is January 15, 2017, the OCC will accept comments through January 17. Recently, more than 250 organizations from across the country have called on the OCC to not grant lending charters to fintech companies.

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