Modernizing the Bank Charter

77 Pages Posted: 10 Sep 2020

See all articles by David T. Zaring

David T. Zaring

University of Pennsylvania - Legal Studies Department

Date Written: July 31, 2020


The banking charter—the license a bank needs to obtain before it can open—has become the centerpiece of an argument about what finance should do for the rest of the economy, both in academia and at the banking agencies. Some advocates have proposed using the charter to pursue industrial policy or to end shadow banking. Some regulators have proposed giving financial technology firms bank charters, potentially breaking down the traditionally high walls between banking and commerce. An empirical survey of chartering decisions by the Office of the Comptroller of the Currency suggests that chartering is best understood as an ultracautious licensing regime for “fit and proper” applicants. It would not and probably should not be easily adapted to realize the policies the advocates propose, or to mix banking with big business. The modern charter should be paired with more transparent administration by agencies and more standard review by courts. These policies could appropriately be paired with the careful and narrow fintech chartering program that regulators have created.

Keywords: financial regulation, charters, administrative law

Suggested Citation

Zaring, David T., Modernizing the Bank Charter (July 31, 2020). William & Mary Law Review, Vol. 61, No. 5, 2020, Available at SSRN:

David T. Zaring (Contact Author)

University of Pennsylvania - Legal Studies Department ( email )

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Philadelphia, PA 19104-6365
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