FDIC Orders Self-Correction from Cross River Bank
Rebeca Moen May 01, 2023 07:51
The FDIC has asked Cross River Bank to correct and address issues in its lending activities. A consent order executed in March alleged that the bank had engaged in "unsafe" banking practices regarding compliance with fair lending laws and regulations in 2021.
The Federal Deposit Insurance Corporation (FDIC) has recently issued a consent order to Cross River Bank, a well-known provider of financial services to fintech and crypto firms, demanding the bank to self-correct and address weaknesses in its lending activities. The FDIC made the order public on April 28, alleging that the bank had engaged in unsafe or unsound banking practices, particularly with regard to its compliance with applicable fair lending laws and regulations in 2021.
According to the consent order executed on March 8, Cross River Bank has failed to maintain adequate fair lending compliance management systems and has not ensured that its board of directors and management adequately oversee fair lending compliance. The order also claimed that the bank had violated several fair lending laws and regulations, including the Equal Credit Opportunity Act, the Fair Housing Act, and the Consumer Financial Protection Act.
In response to the order, Cross River Bank has promised to strengthen its compliance management systems and to take corrective actions, including providing fair lending training to its employees and establishing a fair lending risk assessment process. The bank has also committed to conducting a review of its existing lending policies and procedures and to submit a written plan of corrective action to the FDIC.
Cross River Bank has become known for its provision of financial services to fintech and crypto firms, including partnerships with companies like Visa and Coinbase. The bank has been actively involved in facilitating lending activities in the fintech and crypto spaces, offering loans to small and medium-sized businesses and participating in the government's Paycheck Protection Program (PPP).
The FDIC's consent order serves as a reminder that even well-established financial institutions must comply with fair lending laws and regulations. The regulator has been increasing its scrutiny of fintech and crypto firms in recent years, and the order against Cross River Bank may signal a more proactive approach to oversight in the future.
Despite the order, Cross River Bank remains committed to providing financial services to the fintech and crypto industries. In a statement, the bank's CEO, Gilles Gade, emphasized the importance of compliance with fair lending laws and regulations and expressed the bank's commitment to strengthening its compliance management systems.
In conclusion, the FDIC's recent consent order against Cross River Bank highlights the importance of compliance with fair lending laws and regulations, even for well-established financial institutions. While the order may present some challenges for the bank, it also provides an opportunity for Cross River Bank to strengthen its compliance management systems and continue to provide financial services to the fintech and crypto industries.
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