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OCC Conditionally Approves FinTech Company Applications to Charter National Bank

Daniel.Meade@cwt.com's picture
Commentary by Daniel Meade

On January 18, 2022, the OCC conditionally approved Social Finance, Inc. ("SoFi") applications to charter a full-service national bank.

In the OCC letter, SoFi Interim Bank, National Association ("SoFi Bank, N.A.") has received conditional approval and also received approval to acquire Golden Pacific Bank, National Association as part of the transaction. SoFi Bank, N.A. will have $5.3 billion in total assets. The OCC is requiring, among other conditions, initial paid-in capital of $750 million upon consummation of the transaction. The bank will continue to offer local commercial-focused offerings and deposit products that Golden Pacific previously offered.

The letter states that the bank will also provide a fully digital lending platform for consumers nationally. This is contingent upon (i) meeting the required capital contributions, (ii) adhering to an Operating Agreement, and (iii) confirming that the bank will not engage in any "crypto-asset activities or services."

Additionally, SoFi Technologies, the parent company of SoFi Bank, N.A., has a pending application to the Federal Reserve Board to become a bank holding company and, therefore, would be subject to consolidated supervision.

Acting Comptroller of the Currency Michael J. Hsu emphasized the importance of having an even "playing field." He stated that bringing a large FinTech company "inside the federal bank regulatory perimeter" will subject the company to "bank regulations, including the Community Reinvestment Act," and "comprehensive supervision."

Commentary

Daniel.Meade@cwt.com's picture
Daniel Meade

As noted by Acting Comptroller Hsu, this approval represents one of the first approvals bringing a large FinTech company within the federal regulatory perimeter, and the first full-purpose (i.e., insured deposit-taking) national bank charter for a FinTech. The OCC's conditional order also included a condition that the bank will not engage in any crypto-asset activities or services for the three years the Operating Agreement will be in effect unless it has received prior written determination of no supervisory objection from the OCC under the procedures set out in the Operating Agreement. This is in essence a requirement the OCC makes of all national banks since it issued interpretive letter 1179 in November of 2021. Thus the crypto-asset activities already engaged in by SoFi will need to remain at the parent company.

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