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Lacewell v. OCC: Can the OCC issue a limited purpose national bank charter?

OCC obtains partial victory in Lacewell v. OCC. 2nd Circuit Court leaves unanswered the question of whether the OCC can charter a fintech bank that does not accept deposits.

On June 3, 2021, the 2nd Circuit Court of Appeals rendered its decision in Lacewell v. OCC. The parties and court watchers had anxiously awaited the Court's opinion as to whether the Office of the Comptroller of the Currency could legally charter a fintech national bank that does not accept deposits. The Court reversed the lower court decision with instructions to dismiss without prejudice the case on the grounds that the plaintiff, the Superintendent of the New York State Department of Financial Services, lack standing to bring the action and its claims were constitutionally unripe for decision. The Court's decision does not address the case's central issue of whether the OCC can legally charter a fintech national bank that does not accept deposits, but rather leaves that decision to be made after such a limited bank charter has been granted.

After a great expenditure of time and money, both parties are likely unsatisfied with the decision though the OCC can claim victory because the lower court's decision against the OCC was reversed. The real losers here are the fintechs that hoped to receive limited purpose national bank charters which would give them the benefit of a national bank charter without the burden of bank holding company regulation. If one of those fintechs chooses to obtain such a charter, it will do so without knowing whether the charter will be invalidated by a court in the future, leaving them without a licensed business or subject to bank holding company regulation.

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