The Federal Deposit Insurance Corporation (FDIC) has requested Cross River Bank known for its services to fintech and crypto firms like Visa and Coinbase to “self-correct” and appropriately address weaknesses in its lending activities.
On April 28, the FDIC made public a consent order executed with Cross River Bank on March 8, which alleged that the bank engaged in “unsafe” or “unsound” banking practices regarding its compliance with applicable fair lending laws and regulations in 2021.
Despite accepting the consent order, Cross River has yet to confirm or deny the violations discovered in the 2021 report of examination. It stated,“The FDIC considered the matter and determined, and the Bank neither admits or denies, that it engaged in the unsafe or unsound banking practices related to its compliance with applicable fair lending laws and regulations.”
The order states that the bank must immediately take action to increase its supervision over the “system of internal controls, information systems, credit underwriting practices, and internal audit systems related to the consumer protection laws and regulations.”
Cross River is required to promptly “self-correct” any violations of fair lending laws, and “appropriately address” the deficiencies and weaknesses identified in its lending activities.
Upon evaluating its current structure, Cross River must create processes to avoid future recurrence of these violations.
Furthermore, the bank must submit a fair lending resources study and report by May 7 — conducted by an independent third party — outlining the bank’s size and growth plans, the current and anticipated number of credit products, and their respective volumes.
The report must also detail the number of decisions made on behalf of the bank by third parties in relation to credit applications, credit transactions and the promotion of a credit products offered by Cross River Bank.