Speaking at the 2017 Online Lending Policy Summit in Washington, D.C., Acting Comptroller of the Currency Keith Noreika contrasted his viewpoint with that of some pundits who see the growth of the online lending industry in recent years as a response to the lack of agility of the nation’s conventional banking system. “I do not share that view,” Noreika stated. “I see the growth of online lending and marketplace lenders as the natural evolution of banking itself.” In his prepared remarks for the September Summit, Noreika outlined the ways in which the Office of the Comptroller of the Currency promotes economic opportunity and responsible innovation. “Too often regulatory burden gets in the way of economic opportunity,” he asserted.
Noreika noted that the Summit and similar events “play an important role in informing national policymakers of what the industry needs to provide safe and sound products and services to customers across the country and to unleash their potential to promote economic opportunity.”
Online lending. According to facts and figures relayed by the Acting Comptroller, marketplace lenders have originated about $40 billion in consumer and small business loans in the United States during the past decade. Moreover, online lending “has doubled every year since 2010.” While industry analysts vary somewhat on how high the ceiling is, “some analysts suggest that the market will reach nearly $300 billion by 2020, and others suggest as much as $1 trillion by 2025.”
At the same time, Noreika observed the challenges facing the online lending industry despite its rapid growth. “It remains to be seen how online lending companies … will perform under stress,” he said. “That’s part of a maturing business, and risk is part of economic opportunity. Success requires adapting to new market conditions and effectively managing evolving risks.”
OCC’s efforts. Noreika observed that innovation not only comes from within the banking industry, it also comes from private companies outside the system as well. Pivoting to the OCC’s work to “to promote economic opportunity and responsible innovation,” Noreika underscored that:
- since 2015, the OCC has “published practical guiding principles, held a public forum, and established a framework for supporting responsible innovation;”
- the OCC’s Office of Innovation “serves as a clearinghouse for innovation-related matters and a central point of contact for OCC staff, banks, nonbank companies, and other industry stakeholders;”
- through “regulatory sandboxes” and “bank pilot” programs, the OCC not only fosters responsible innovation, the OCC also increases its own knowledge and understanding of innovative products, services, and technologies;
- the OCC supports the chartering of “fintech companies that want to become national banks;”
- there is increasing interest in the OCC possibly offering special-purpose national bank charters to “nondepository fintech companies engaged in the business of banking;”
- Noreika and the OCC have sought ways in which to lessen the regulatory burden on the online lending industry; and
- Noreika personally “added his voice to the chorus in letters to Congress denouncing Operation Chokepoint.”
Banks’ responsibility. According to Noreika, “Banks make the decisions to retain or terminate customer relationships, not the regulators, and not the OCC.” Accordingly, banks have a responsibility to provide “fair access and fair treatment,” he emphasized. “If the system fails to provide fairness to all, it cannot be a source of strength to any,” he stated.
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