A federal judge in the District of Columbia again shot down a lawsuit aiming to stop the Office of the Comptroller of the Currency from offering its special-purpose national bank charter to financial technology companies.
The Conference of State Bank Supervisors, or CSBS, has twice challenged the OCC's legal right to issue such a charter, which is more commonly called the fintech charter. In her opinion, U.S. District Judge Dabney Friedrich said she was dismissing the lawsuit because the group "continues to lack standing" and its claims "remain unripe" since no applicant has formally applied for the fintech charter.
The judge also said CSBS failed to plead an injury in fact that is either actual or imminent, since the court had previously ruled that harm was contingent on whether the OCC charters a fintech company.
The dismissal echoes the judge's first dismissal of CSBS' lawsuit, which came in May 2018, and the dismissal in December 2017 of a similar lawsuit from the New York State Department of Financial Services. At those times, the OCC's fintech charter was still a proposal. Both agencies again filed suits against the OCC after it announced it was open to reviewing applications.
No applicant has yet applied for the fintech charter, and many experts believe the pending lawsuits were causing companies to delay filing such applications. At the Federal Deposit Insurance Corp.'s Fintech Conference in April, Comptroller Joseph Otting called the lawsuits "a nuisance" but said they do not need to be resolved before a company may pursue the charter. The bank regulator has continued to push back its expected timeline for the first charter applicant.
"It is important that the regulatory framework for the national banking system is allowed to evolve," an OCC spokesperson said in an emailed statement after the latest ruling. "The ability to issue such charters in the federal banking system provides greater choice to banks, businesses, and consumers."
But the OCC still faces another challenger.
In May, a federal judge allowed the New York DFS' similar suit against the OCC to move forward. The OCC had argued, in part, that the lawsuit should be dismissed because no fintech company has applied for the charter. But the judge disagreed, writing that the DFS demonstrated a "substantial risk that the harm will occur."
