ICBA: OCC should withdraw national trust bank chartering proposal

ICBA urged the OCC to withdraw its notice of proposed rulemaking on national bank chartering or issue an amended proposal that is consistent with its statutory authority.

Background: The OCC last month issued a proposed rule on national bank chartering that would amend current regulations to permit the OCC to charter limited-purpose trust banks that engage substantially in non-fiduciary activities.

Details: In a letter responding to the OCC’s request for information on the rulemaking, ICBA said:

• The proposed amendment is inconsistent with statutory authority and poses significant public policy concerns.

• It is concerned that the proposed change will promote the position that the OCC may charter uninsured national trust banks that engage in non-fiduciary cryptocurrency-related activities without being subject to the Bank Holding Company Act and other prudential requirements that apply to FDIC-insured institutions.

• The OCC should withdraw the proposed rule or reissue an amended proposal consistent with the OCC’s statutory authority.

• At a minimum, the agency should also impose a moratorium on pending and new charter applications until a final rule fully aligns with statutory intent and incorporates public comments.

Recent Advocacy:

• ICBA in December expressed opposition to the OCC’s conditional approval of five national trust bank charter applications from nonbank fintechs, saying the OCC lacks statutory authority to expand trust powers under Interpretive Letter #1176 and the 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.

• A recent Independent Banker article and previous ICBA blog post break down the influx of applications from nonbank fintech firms for national bank trust charters and the risks they pose to the financial system.

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