Who’s down with OCC(’s Definition of 'Banks')?

Abstract

This article wrestles with a seemingly straightforward question that turns out to be surprisingly complex: what is a bank? The Office of the Comptroller of the Currency (the OCC) recently began offering special purpose national bank (SPNB) charters to entities that are, at best, bank-like. But are they banks or not? Although the OCC considers SPNBs to be banks, not everyone is sure to agree, including bankruptcy judges. The question matters because banks are ineligible for bankruptcy relief. This Article considers the legal and policy arguments that are likely to be presented to bankruptcy judges about whether SPNBs are banks and concludes that bankruptcy judges are likely to disregard the OCC’s interpretation and conclude SPNBs are not banks. If SPNBs are bankruptcy-eligible because they are not banks, a host of issues arise. For example, can a SPNB rush to bankruptcy court to take advantage of the automatic stay if the OCC tries to revoke its charter? Will bankruptcy courts or the OCC control the resolution of a financially distressed SPNB? How fast and by what processes will their financial trouble be resolved? This Article explores these questions.

Keywords: fintech charter, fintech, bankruptcy, Special purpose national banks, national banks, OCC, bank charters, bank