In a letter dated October 11, 2022 to Acting Comptroller Michael J. Hsu, Patrick McHenry, the ranking member of the U.S. House of Representatives Committee on Financial Services, and four other Republican representatives, asked Mr. Hsu to respond to pointed questions about the OCC’s planned role in support of bank-fintech partnerships.  The letter cites benefits to consumers and the economy afforded by innovation and “new financial products and services” available due to bank-fintech partnerships, which “foster greater inclusion and competition in our financial system”:

Let us be clear.  Technological innovation fostered by fintech partnerships has enabled banks to reach segments of the population that may have been left behind and increase customer engagement.  Much of this innovation has been driven by industry newcomers that have developed a novel product or business model.  When properly regulated, these partnerships can provide greater financial inclusion, spur technological innovation, and foster competition that ultimately benefits consumers.

The letter goes on to point out that “[when] conducted properly, the benefits from these partnerships far outweigh the risks.”  The letter goes on to decry the “political controversy” that led to nullification of the OCC’s True Lender Rule “along party lines,” asserting “[t]his single act will have repercussions for communities throughout the United States, including those who need credit the most.”  The ensuing seven questions posed by the letter explore issues including whether, in determining what terms will be acceptable in bank-fintech partnerships, the OCC will “take into consideration the impact on the underbanked, communities of color, rural communities, and small businesses”; what specific risks are posed by bank-fintech partnerships; and how the OCC will “ensure that examiners do not discourage innovation through fintech partnerships and will not impose unreasonable burdens on banks and fintechs.”

We look forward to the OCC’s responses to the letter, which comes at a pivotal moment for bank-fintech partnerships.  OCC support for bank-fintech partnerships is particularly crucial right now in light of litigation underway between Opportunity Financial, LLC  and the California Department of Financial Protection and Innovation.