The Conference of State Bank Supervisors (CSBS) announced it has filed a complaint in the U.S. District Court for the District of Columbia opposing the Office of the Comptroller of the Currency’s (OCC) creation of a new national bank charter for nonbank companies and its acceptance and impending approval of a charter application from Figure Technologies Inc.

“Figure is essentially the first applicant for the OCC’s fintech charter. Its plan to become a national bank without obtaining deposit insurance is an illegitimate attempt to evade the controversy surrounding the fintech charter and the federal court decision that invalidated it,” said John W. Ryan, CSBS president and CEO. “If the OCC is allowed to create a special purpose nonbank charter, it would redefine our entire banking system, create new systemic risks and set a dangerous precedent that any federal agency can act beyond its legal limits. We believe that the court will share our concern and rule against the OCC’s unlawful attempts to expand its authority.”

The CSBS complaint filed today is a continuation of legal action initiated in 2017. The complaint asserts that by creating a national bank charter for nonbank companies, the OCC has gone far beyond the limited authority granted to it by Congress under the National Bank Act and other federal banking laws. Those laws authorize the OCC to only charter institutions that lawfully carry on the “business of banking,” which under federal banking law requires an institution to receive deposits and obtain FDIC deposit insurance.

The New York Department of Financial Services (NYDFS) has also challenged the OCC’s fintech charter in federal court. The U.S. District Court for the Southern District of New York found in favor of the NYDFS and invalidated the proposed fintech charter. The court ruled that the OCC lacks the authority to grant a charter to an entity that does not take deposits and does not obtain deposit insurance. The decision has nationwide applicability.