On December 19, 2019, the Office of the Comptroller of the Currency (OCC) appealed a decision from the U.S. District Court for the Southern District of New York holding that the OCC cannot offer special purpose national bank charters to fintech companies. Lacewell v. Office of the Comptroller of the Currency, Case 1:18-cv-08377 (S.D.N.Y. Sept. 14, 2018).

As we have covered previously, in Lacewell, the New York State Department of Financial Services (DFS) challenged the OCC’s authority to grant a national bank charter to a fintech company that does not intend to take deposits and is not a credit card bank, bankers’ bank, or trust bank. DFS’s position was consistent with a similar challenge brought in the United States District Court for the District of Columbia.

In its motion to dismiss the lawsuit, the OCC argued that the National Bank Act grants it the authority to offer charters to any institution, including fintech companies, that engages in “the business of banking.” The district court, however, disagreed. It concluded that this clause “read in the light of its plain language, history, and legislative context, unambiguously requires that, absent a statutory provision to the contrary, only depository institutions are eligible to receive national bank charters from the OCC.”

On appeal, the OCC will likely argue, as it did with the district court, that the statutory phrase “business of banking” is ambiguous and thus that its reasonable interpretation of that phrase is entitled to deference under the Chevron doctrine. The Second Circuit will have to consider, therefore, whether this phrase is in fact ambiguous and, if so, whether the OCC’s interpretation is reasonable in light of the text, nature, and purpose of the statute.