Dive Brief:

• A federal judge Tuesday, for the second time, rejected a lawsuit seeking to block the Office of the Comptroller of the Currency's fintech charter. The Conference of State Bank Supervisors (CSBS) has raised concerns the OCC may be skirting Congress and state laws by potentially granting national bank charters to nondepository companies.
• No fintech firm has yet applied with the OCC, so the CSBS has no standing, Judge Dabney Friedrich of the U.S. District Court for the District of Columbia ruled. The charter, however, remains in limbo because a similar lawsuit filed by New York's Department of Financial Services was allowed to move forward in May. 
• Interested companies appear to be waiting to see how the legal challenges shake out before pursuing the charter. Google, PayPal and other tech firms explored working with the OCC under the deal but walked away for fear their relationships with state regulators might suffer, American Banker reported in June. The OCC had previously said it expected its first nonbank applicant in the second quarter of this year.

Dive Insight:

John Ryan, the CSBS's president and CEO, criticized Friedrich's decision, saying she "did not rule on the merits of the case."

But Friedrich said "not much has happened" since her previous ruling in the case. She tossed an earlier CSBS lawsuit in May 2018 because the OCC had not yet granted a charter. At the time, however, it was unclear whether the OCC would make the charter available. The CSBS refiled the suit in October 2018, after the OCC finalized the charter’s framework.

An OCC spokesperson applauded the decision, defending the agency’s authority to issue the charter "to institutions engaged in the business of banking as evidenced by their taking deposits, paying checks, or lending money."

"It is important that the regulatory framework for the national banking system is allowed to evolve so that it can continue to meet the changing needs of consumers, businesses, and communities it serves and so that we maintain the health of a dual banking system," the spokesperson said.

The CSBS's Ryan supported the New York regulator's case. "Our position that receiving deposits is an indispensable part of the business of banking is unchanged," he said.

The ruling did not appear to serve as a barrier to future legal challenges if the OCC were to accept or approve an application.