Mission Lane gets green light for OCC charter

Mission Lane received conditional approval Friday to become a nationally chartered credit card bank, according to a report from Banking Dive. The Office of the Comptroller of the Currency approved the fintech's application to establish Mission Lane Bank National Association five months after it was submitted. The company said the move brings it one step closer to issuing its own cards and reflects its commitment to serving the estimated 73 million Americans who struggle to access traditional banking services.

The credit card charter was created through the Competitive Equality in Banking Act of 1987, which also created industrial loan charters. Like ILCs, CEBA charters are not subject to Federal Reserve oversight. Mission Lane Bank must have $35 million of initial paid-in capital, which must be raised within 12 months, and must maintain a tier 1 leverage ratio of at least 11% throughout its first three years of operation. CEBA charter holders are not permitted to accept demand deposits, or to accept savings or time deposits of less than $100,000 unless they are used as collateral for secured credit card loans.

The conditional approval should dispel concerns about the OCC's receptivity to chartering banks that focus on underserved consumers, said Michele Alt, co-founder at regulatory consultant Klaros Group, which assisted Mission Lane on its application. With the approval, Mission Lane is set to become the first new OCC-regulated credit card bank in more than 20 years, Alt said. The charter would allow Mission Lane to originate and hold loans without relying on its partner banks, Ogden, Utah-based TAB Bank and Salt Lake City-based WebBank.

Mission Lane is still waiting on deposit insurance approval from the Federal Deposit Insurance Corp., along with other preopening requirements. A spokesperson for Mission Lane did not immediately respond to a request for additional comment, leaving open questions about the timing of the bank's launch and how the charter will affect its existing customer base of around 3 million and its 45-state footprint.