by Pam Martens and Russ Martens
Wall Street on Parade
Seven banking and credit union associations have sent a letter to the Office of the Comptroller of the Currency (OCC), the regulator of national banks in the U.S., spelling out the dangers of the OCC approving a pending bank charter that would allow a national bank to accept and hold deposits that lack federal deposit insurance. The lack of federal deposit insurance triggered the bank runs and banks collapses that played a key role in ushering in the Great Depression. (More on that in a moment.)
The bank making the proposal for uninsured banking is Figure Bank, N.A., part of the blockchain startup, Figure Technologies. The organizations wisely arguing against it are the American Bankers Association, Bank Policy Institute, Credit Union National Association, Independent Community Bankers of America, National Association of Federally Insured Credit Unions, The Clearing House, and Consumer Bankers Association.
The organizations make the following points in their letter to the OCC: