Legal Seminar, Denver, CO

Fintech Charter: OCC Special Purpose Chartering Authority

• OCC may only charter an entity for a purpose other than carrying on the business of banking if the entity is chartered to carry on an expressly authorized special purpose. – Trust banks: engage solely in fiduciary activities [12 USC 27(a)] – Bankers’ banks: engage solely in correspondent banking activities [12 USC 27(b)] • The existence of these specific grants of authority demonstrates that the OCC does not have any authority to charter special-purpose national banks other than those expressly authorized by statute. IBAA v. Conover .

For Discussion Purposes Only

Fintech Charter: OCC Special Purpose Chartering Authority: National Trust Banks

• National trust bank chartering authority is illustrative – Under the NBA, fiduciary activities are not within the “business of banking”.

• In 1977, OCC attempted charter a national bank whose activities would be limited to the fiduciary services provided by a trust company – National State Bank v. Smith (1977) held that the OCC lacked authority to charter an institution that would not be engaged in the business of banking. – While appeal was pending, Congress amended the NBA in 1978 to give the OCC specific authorization to create the national trust banks. • OCC argued that the trust bank amendment should be read as a post-hoc congressional endorsement of the OCC’s authority to issue special purpose charters under its general chartering authority

For Discussion Purposes Only