Nat’l bank charter for uninsured institution raises major concerns

December 7, 2020

Consideration of a national bank charter application for an uninsured depository institution should be postponed, CUNA and other organizations wrote Monday to the Office of the Comptroller of the Currency (OCC) Monday. The Nevada-based Figure Bank submitted an application to OCC Nov. 6.

“Given the significant policy, legal, systemic, and other implications that chartering an organization like Applicant, with its unique business model and structure, would have for the banking system, the Associations urge the OCC to postpone its consideration of Figure Bank’s application until after it has solicited and evaluated public comments, and consulted with Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Department of Justice.

The organizations believe the “precedent-shattering approach” of granting a national bank charter to an institution that accepts only uninsured deposits would violate the Federal law, the consistently expressed intent of Congress and public policy considerations essential to the functioning of the nation’s financial system.

Other concerns include:

  • The OCC has provided the public with only a limited understanding of Figure Bank’s proposed activities;
  • Granting an application for an uninsured national bank would violate the Federal Reserve Act;
  • Approval of the application would result in evasion of prudential standards established by Congress;
  • Granting a national bank charter to an uninsured depository institution would represent a significant policy shift, one requiring Congressional Action; and
  • The OCC should consult with the DOJ to determine whether an uninsured national bank would raise concerns under certain sections of the Banking Act.