OCC Conditionally Approves FinTech Company Applications To Charter National Bank – Finance and Banking

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

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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.