The OCC today announced it will move forward with the fintech special-purpose national-bank charter first considered in its white paper (see FSM Report FINTECH). As expected, the OCC will apply the same level of scrutiny to these charters as it does to other national banks, possibly going beyond these to emphasize financial inclusion. The OCC’s announcement was preceded by FRB Governor Brainard, who issued a strong warning to banks considering offering or partnering with firms that offer innovative products and services, making clear that the FRB may address “undue burdens” but will not ease the protections it requires of banks. Her concerns include not only traditional risks such as credit and liquidity, but also consumer protection issues such as data privacy and disparate impact. In particular, Ms. Brainard focused on a number of risks posed by sharing bank data with fintech companies, issuing an array of caveats despite the CFPB’s recent effort to force banks to do so (see FSM Report FINTECH6). The FRB is also wary of “regtech,” where big data or similar techniques are used to aid compliance in areas such as anti-money laundering.
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