Comment on the Proposed Rule Regarding Receiverships for Uninsured National Banks

The Office of the Comptroller of the Currency (OCC), which has the power to act as receiver for nondepositories, is wisely considering what form its role as a receiver might take. The OCC has asked, among other things, whether using the National Bank Act receivership framework for innovative “fintech” companies poses unique challenges.

This paper from the Mercatus Center at George Mason University argues that the answer to this question is yes. The unique risks posed or avoided by fintech firms distinguish them from traditional depository institutions in important ways. The OCC’s treatment of these firms should take those differences into account so that the OCC’s policies protect customers without undue regulatory burden.

Given the OCC’s commendable interest in innovation, this letter from the Mercatus Center focuses primarily on emerging and innovative fintech firms. However, its arguments may also have implications for more traditional nondepository firms or depository firms that adopt innovative new business processes that lessen or remove the risk to their deposits.

Ultimately, the OCC should avoid applying unnecessarily burdensome or inapt requirements that do nothing to further customer protection. Instead, the OCC should focus on ensuring that failure will be orderly. Laying the groundwork for “responsible failure” should be a key part of the OCC’s commitment to fostering innovation.

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