On October 2, a national trade association representing community banks brought an action against the OCC in the U.S. District Court for the District of Columbia. The suit challenges the agency’s March 2 final rule on national bank chartering (previously covered by InfoBytes here); a January 11, 2021, interpretive letter; and the OCC’s conditional approval of a national trust bank charter for a crypto company. The final rule replaced references to “fiduciary activities” in the OCC’s chartering regulation with “operations of a trust company and activities related thereto.” The plaintiff alleged that all three actions exceed the OCC’s authority under the National Bank Act (NBA) and violate the APA.

According to the complaint, the NBA permits the OCC to charter only depository banks, bankers’ banks, and trust banks that provide fiduciary services. The plaintiff argued that the OCC misread a 1978 amendment providing that a national bank “is not illegally constituted solely because” its operations are required by the Comptroller to be limited “to those of a trust company and activities related thereto.” In the plaintiff’s view, that language allows the OCC to limit a charter to fiduciary services but does not authorize trust banks that neither take deposits nor engage in fiduciary activities. The complaint noted that the OCC, in finalizing the rule, maintained that it was not changing its “long-held interpretation and historical practice,” that “trust” and “fiduciary” carry different meanings in federal banking statutes and that a contrary federal appellate interpretation was “dicta.” The plaintiff also invoked the major questions doctrine.

The complaint alleged that the OCC has approved or conditionally approved 21 trust banks, at least 13 of which are crypto companies. According to the plaintiff, these trust banks can compete with community banks without carrying deposit insurance or meeting several federal regulatory requirements, while their charters preempt certain state consumer protection laws, placing community banks at a “severe competitive disadvantage.” The plaintiff alleged that the rule is arbitrary and capricious because the OCC gave only a two-page response to comments, called several policy concerns “outside of the scope” of the rulemaking, and did not address consumer confusion or receivership risks. The plaintiff also argued that the interpretive letter is a “rule” that should have gone through notice and comment. As for the charter approval, the plaintiff alleged that the company’s primarily nonfiduciary custody, trading, lending and issuer services platforms are inconsistent with a trust charter and that the OCC failed to address comments on financial-system risk and the separation of banking and commerce. The plaintiff asked the court to vacate all three actions and to enjoin further charter approvals under the rule or the letter.