On Monday, a federal district court judge in the District of Columbia issued an order dismissing a lawsuit brought by the Conference of State Bank Supervisors (CSBS) regarding a proposal of the Office of the Comptroller of the Currency (OCC) to issue federal charters to certain Fintech firms. In dismissing the case, US District Court Judge Dabney L. Friedrich held the CSBS did not have standing to sue because the OCC had not yet officially decided to issue charters to Fintech companies. Judge Friedrich explained that the CSBS lacks standing to bring the suit because the harms it alleges are “contingent on whether the OCC charters” a Fintech company, and “[s]everal contingent and speculative events must occur before the OCC” issues such a charter.
In December 2016, the OCC announced plans to study whether it would issue special purpose charters to Fintech firms. In March 2017, Comptroller Thomas J. Curry announced the OCC may issue such charters. In the same month, the OCC released a draft document describing how it envisioned Fintech companies could apply for a charter. The CSBS sued the OCC in April 2017 regarding the proposal to grant charters to Fintech companies. According to the CSBS, the OCC did not have authority to issue charters to such companies.
In May 2017, Mr. Curry stepped down from his position; subsequently Keith Noreika served as Acting Comptroller. In the following months, Acting Comptroller Noreika stated several times that the OCC had not reached a final decision. Joseph Otting was then nominated by President Trump as permanent Comptroller of the Currency and was confirmed in November 2017. In Judge Friedrich’s decision, she noted that “[i]n light of the recent leadership changes at the OCC, it is particularly speculative to guess whether the OCC will continue down paths considered by a previous Comptroller.”
Judge Friedrich found that the CSBS lacked standing to sue because it had not pleaded an injury that is concrete, particularized, and actual or imminent. She based this finding in part on the fact that the OCC had not attempted to issue a special purpose charter to a Fintech company, and a chain of speculative events would need to occur prior to any harm coming to a CSBS member. In the alternative, she found that the case should be dismissed as prudentially unripe because the OCC has not decided on a course of action that is sufficiently settled or finalized for a court to review.
As explained in a prior blog post, the New York State Department of Financial Services had filed a similar lawsuit against the OCC in the US District Court for the Southern District of New York. The judge in that case granted a motion to dismiss in December 2017 on substantially similar grounds to those upon which Judge Friedrich relied.