NYDFS Superintendent Maria Vullo claims the OCC usurped state powers
The New York State Department of Financial Services has sued the Office of the Comptroller of the Currency (OCC) to challenge its move to allow non-depository financial technology companies engaged in banking to apply for national bank charters, according to a Reuters report.
Maria Vullo, superintendent of the state’s top banking regulator, claimed the decision was unconstitutional as well as “lawless, ill-conceived, and destabilizing of financial markets.”
The lawsuit, filed in the US District Court in Manhattan, is asking for a declaration that the federal agency usurped state powers in violation of the Constitution’s 10th Amendment and also that it exceeded its authority under the National Bank Act.
Vullo said the state could best regulate financial markets. As superintendent, she oversees more than 2,200 banks, financial services companies, and insurers representing about $7 trillion of total assets.
“Financial centers like New York, which have developed comprehensive and well-functioning regulatory bodies, should not needlessly bear the harmful brunt of an overreaching federal agency,” the complaint said.
Vullo argues that the OCC’s move weakens oversight of predatory lending, undermines the competitiveness of local banks, and allows the creation of “too big to fail” institutions, all leaving consumers at great risk of exploitation. “The OCC’s reckless folly should be stopped,” she said in the complaint.
Bryan Hubbard, spokesman for the OCC, told Reuters in an email that the agency will vigorously defend its authority to grant national charters to qualified companies.
Fintech companies have long sought national bank charters to avoid the necessity of obtaining licenses in every state, which companies claim hampers growth and drives costs. However, such a grant has been criticized for potentially allowing unscrupulous firms to be shielded from state oversight.
