January 17, 2017 / 7:25 PM / 3 years ago

New York opposes federal charters for online lenders

NEW YORK, Jan 17 (Reuters) - New York’s financial services regulator on Tuesday formally opposed a plan by a federal banking regulator to offer special-purpose charters that would let online lenders and other “fintech” companies do business nationwide.

Maria Vullo, superintendent of New York’s Department of Financial Services, said the charter proposal from the Office of the Comptroller of the Currency (OCC) was a “highly problematic” attempt to usurp state laws.

Such a charter would “invite serious risk of regulatory confusion and uncertainty, stifle small business innovation ... imperil crucially important state-based consumer protection laws and increase the risks presented by nonbank entities,” Vullo wrote to the OCC in a letter opposing the plan.

OCC spokesman Bryan Hubbard said the regulator would consider the comments, but that it had the authority to move ahead with the plan. It was not immediately clear when the OCC will begin accepting applications for charters.

The OCC has also received comment letters from the Iowa Bankers Association, which expressed concerns, and IDT Telecom Inc, which welcomed the proposed charter. Tuesday was the final day for comments to be submitted.

Comptroller Thomas Curry last month outlined a proposal that would let fintech companies that provide banking products and services get federal charters. He said that would help them reach underserved communities and uphold consumer protections.

“Fintech” companies use innovative technology to provide services for everything from banking and insurance to fraud security.

Vullo, whose office has sought to regulate such firms, voiced concerns about the OCC plan when it was first announced, as did other state regulators. (Reporting By Karen Freifeld; Editing by Daniel Wallis)

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