Exclusive: ICBA sues OCC over trust charters

• Key insight: The Independent Community Bankers of America alleges in a new lawsuit that the Office of the Comptroller of the Currency has exceeded its authority in widening its ability to grant trust charters. 
• What's at stake: The ICBA says that chartering crypto companies as trust banks could drain deposits away from the banking system and put them in institutions that have no obligation or history of lending to local businesses and communities. 
• Expert quote: "This vast expansion of power creates a gaping hole in financial regulation." —ICBA lawsuit

WASHINGTON — Community bankers are suing the Office of the Comptroller of the Currency over their granting of trust charters to a number of fintechs and crypto firms, according to a lawsuit obtained by American Banker. 

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Under the Trump administration, the OCC has approved a wave of trust charters to crypto companies, including the Trump family-linked World Liberty Financial, Coinbase and Circle. Banks have long argued against the charters and the agency's granting of them, and the lawsuit escalates those efforts. 

The Independent Community Bankers of America allege in the new lawsuit that the agency has exceeded its authority under the National Bank Act to charter trust banks that perform fiduciary activities. The group is challenging a rule the OCC finalized earlier this year that banks say significantly widened the agency's ability to grant trust charters. The rule codifies an interpretive letter from President Donald Trump's first term, written by now-Comptroller Jonathan Gould when he was the OCC's chief counsel.