Cross River Bank, a leading financial institution that provides services to fintech and crypto firms, has been ordered by the Federal Deposit Insurance Corporation (FDIC) to address weaknesses in its lending activities and promptly self-correct any violations of fair lending laws. The FDIC issued a consent order on March 8, alleging that the bank engaged in “unsafe” or “unsound” banking practices in 2021. Although Cross River accepted the consent order, it did not admit or deny the violations discovered in the 2021 report of examination.
Cross River refuses to accept or deny the allegations
The order requires Cross River Bank to increase its supervision over the system of internal controls, information systems, credit underwriting practices, and internal audit systems related to consumer protection laws and regulations. The bank must also appropriately address the deficiencies and weaknesses identified in the 2021 report of examination, and create processes to prevent them from arising in the future.
Cross River’s CEO, Gilles Gade, acknowledged in a statement on April 27 that regulatory scrutiny on banks is increasing and emphasized the importance of transparency and responsibility. He mentioned that the bank is the largest of these banking institutions and has regulatory examiners reviewing some elements of their business continuously. The FDIC has requested that Cross River fully comply with the consent order on time.
The timing of the consent order raises questions about the potential impact on the partnership between Cross River and Circle, the stablecoin issuer behind USDC. Circle sought the new partnership after its previous provider, Silicon Valley Bank, collapsed on March 11.
FDIC move shows scrutiny by regulators on firms in the market
The FDIC’s move against Cross River Bank reflects the increased regulatory scrutiny on banks and financial institutions, particularly in the fintech and crypto space. Compliance with fair lending laws and regulations is critical for maintaining trust and stability in the financial system, and violations can have significant repercussions for banks and their customers.
Cross River Bank’s compliance capability is a strategic advantage, and the bank has taken measures to ensure the highest levels of compliance, transparency, and responsibility. However, the consent order indicates that there are still weaknesses in the bank’s lending activities that need to be addressed. Cross River Bank must act swiftly and thoroughly to self-correct any violations of fair lending laws, strengthen its internal controls, and ensure compliance with all applicable regulations.
The consent order issued by the FDIC against Cross River Bank highlights the importance of compliance with fair lending laws and regulations. The bank must address weaknesses in its lending activities, create processes to prevent similar weaknesses from arising in the future, and fully comply with the consent order on time. The bank’s ability to self-correct and ensure compliance will be crucial in maintaining trust and stability in the financial system.
Source: https://www.cryptopolitan.com/fdic-fraud-accusations-against-cross-river/