Comptroller of the Currency Jonathan Gould Defends National Trust Bank Charters
Comptroller of the Currency Jonathan Gould recently defended the Office of the Comptroller of the Currency’s (OCC) conditional approval of several national trust bank charters amid criticism from bank trade groups and Democratic lawmakers. During Semafor’s Banking on the Future Forum, Gould emphasized that the OCC evaluates applications based on a reasonable chance of success rather than zero risk tolerance, as mandated by the statute.
Restoring Regular Working Order
Gould highlighted that after the financial crisis of 2008, the OCC observed an average of zero to two applications per year, which he deemed as a “disgrace.” He mentioned that the OCC’s current approach aims to restore regular working order by evaluating applications within established time frames and statutory factors provided by Congress.
Changing Landscape
Under Gould’s leadership, the OCC has approved approximately nine national trust charters on a conditional basis, including prominent firms like Coinbase, Ripple, Circle, Fidelity Digital Assets, and Paxos. Gould, who previously served as the chief legal officer at blockchain firm Bitfury, emphasized that the relationship between traditional finance and digital assets is no longer antagonistic.
Concerns and Scrutiny
Despite the approvals, bank trade groups have expressed concerns about the increased risks to consumers and the financial system posed by allowing crypto and fintech companies to operate under less rigorous charters. Senator Elizabeth Warren has also demanded further explanation from Gould regarding the OCC’s approval of national trust charters for cryptocurrency firms.
Legal Confidence and Oversight
In response to potential lawsuits against the OCC, Gould expressed confidence in the agency’s litigation team and affirmed the legal authority to carry out their actions. He noted that occasional lawsuits serve as a discipline for the agency to sharpen their approach and improve their operations.
System Refresh
Gould attributed the surge in trust bank charter applications to pent-up demand and efforts by the Federal Deposit Insurance Corporation (FDIC) to streamline the deposit insurance application process. He emphasized the importance of maintaining a balance in the banking system to allow fresh entrants and ensure long-term relevance and functionality.
Risk-Based Customer Due Diligence
Gould also addressed President Donald Trump’s executive order aimed at strengthening risk-based customer due diligence requirements for banks, emphasizing the need for lenders to know their customers and prevent financial fraud, money laundering, and terrorism finance. He highlighted recent proposals by federal banking agencies to revise the Bank Secrecy Act/anti-money laundering program rule to focus more on higher-risk customers and activities.
Conclusion
In conclusion, Comptroller of the Currency Jonathan Gould’s defense of the OCC’s conditional approval of national trust bank charters reflects a broader shift in the banking landscape towards embracing digital assets and fintech innovation. While facing scrutiny and legal challenges, Gould remains confident in the agency’s legal authority and commitment to maintaining a balanced and relevant banking system.
Source: Banking Dive
