A Dual Non-Banking System? Or a Non-Dual Non-Banking System? Considering the OCC's Proposal for a Non-Bank Special Purpose National Charter for Fintech Companies, against an Alternative Competitive Federalism System, for an Era of Fintech Banking


This Article examines the Office of the Comptroller of the Currency’s (OCC) proposal to grant special purpose national bank charters to rapidly emerging financial technology (fintech) companies. The Article contemplates the particular dynamics of the OCC’s proposal in light of recent court decisions such as Madden v. Midland Funding, LLC and CashCall that have called certain aspects of the fintech-bank partnership model (bank partnership model) historically favored by fintech companies. This Article reviews how the dual banking system has functioned historically, and uses this analysis to predict how the OCC’s proposal would be expected to operate. After detailing potential issues posed by the OCC’s federal solution, the Article puts forth a more effective alternative to the OCC’s proposal in the form of a competitive state fintech chartering system modeled on the competitive state chartering system for corporations. The Article also briefly considers whether the OCC could establish a hybrid approach in which national bank charters might incorporate elements of state competition. The Article concludes with a consideration of complications that will continue to inhibit the promise of a fintech charter under a competitive federalism inspired system of state fintech chartering competition.