State-chartered banks and non-banks alike face a challenging 50-state regulatory regime when offering interstate internet banking and financial services, which puts them at a competitive disadvantage when compared to national banks offering those same services under greater protection of federal preemption.
The Office of the Comptroller of the Currency recently proposed an initiative to allow certain types of non-bank entities, such as loan companies and money transmitters, to become national banks and gain the benefit of federal preemption to address this 50-state regulatory burden. That OCC plan is now under attack in court and by certain members of Congress. The states themselves have been among the most significant critics of the OCC’s fintech initiative.
However, certain states are now looking into solutions to address the heavy burden of this 50-state regulatory regime on state-chartered banks and state-licensed fintech companies. The attached article focuses on potential solutions the states may pursue to address these challenging multi-state regulatory issues.
Greg Omer advises banking and financial services organizations on regulatory and corporate issues. He is a former bank and financial services regulator and speaks regularly to financial industry groups on regulatory issues.