Washington, D.C. — The Independent Community Bankers of America (ICBA) today expressed opposition to the Office of the Comptroller of the Currency’s conditional approval of five national trust bank charter applications from nonbank fintechs.
ICBA has repeatedly said in letters to the OCC that the agency lacks statutory authority to expand trust powers under Interpretive Letter #1176 and that the sudden influx of applications demonstrates nonbank fintechs are seeking the benefits of a U.S. bank charter without satisfying the full scope of U.S. bank regulations — threatening consumers and the financial system.
“Trust banks are not required to meet the same kinds of regulatory and capital standards that apply to federally insured full-service banks. The conditional approvals of five national trust bank charters from the OCC further stretches the national trust bank charter beyond its statutory and historical purpose, endangers consumers, and creates institutions the OCC is not equipped to resolve in an orderly way,” ICBA President and CEO Rebeca Romero Rainey said today. “The OCC’s dramatic policy change under Interpretive Letter #1176 is a departure from the role of conventional trust companies and allows for an inconsistent regulatory framework that threatens financial instability — requiring the agency to change course.”
As ICBA detailed in a blog post earlier this year, the role of trust companies in safekeeping customers’ assets has generated interest in the OCC’s national trust bank charter from nonbank fintech companies — risky institutions looking to attract insured deposits to their uninsured deposit-like accounts with few protections for consumers. The OCC’s policy shift under Interpretive Letter #1176 enables these nonbanks to receive a traditional trust charter while engaging in activities the charter was never intended to permit, raising questions about the applicants’ fiduciary activities and the significant departure from existing OCC precedent that these applications represent.
ICBA continues to call on the agency to pause consideration of these applications, rescind Interpretive Letter #1176, and undertake a formal rulemaking that will clarify the scope of this charter and ensure alignment with congressional intent.
About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.
As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.