• The Federal Deposit Insurance Corporation (FDIC) recently sent a cease-and-desist order to Cross River Bank requesting that the bank implement greater oversight and control through a consent agreement.
• The FDIC’s order outlines various breaches in compliance with fair lending laws and regulations which the bank must address by May 7.
• Despite the regulator’s action, Cross River Bank has denied any wrongdoing and maintains that it adheres to “the highest levels of compliance”.
FDIC Issues Cease-And-Desist Order To Cross River Bank
The Federal Deposit Insurance Corporation (FDIC) seems to have increased its scrutiny of crypto-friendly banks as it recently sent a cease-and-desist order to Cross River Bank requiring it to “self-correct” and properly address the vulnerabilities in its lending operations. A 34-page consent order document was released on 28th April 2021 detailing that Cross River Bank had failed to establish and maintain internal controls, information systems, and prudent credit underwriting practices.
Required Steps To Address Alleged Regulatory Breaches
Cross River Bank is required to implement processes that will help them avoid similar infringements in the future as well as tender a fair lending resources study and report by May 7. This report must be done by an independent third party, highlighting information such as the institution’s size, expansion plans, current and anticipated number of credit products, and their respective volumes.
Bank Denies Allegations
Cross River’s CEO Gilles Gade issued a statement emphasizing that the bank maintains “the highest levels of compliance” – albeit without mentioning the FDIC allegations. Despite this, none of these allegations have been admitted or denied by Cross River Bank yet.
Action Not Related To Cryptocurrency Activities
According to a separate Wall Street Journal report, a Cross River spokesperson said that this action taken by FDIC has nothing to do with cryptocurrency activities conducted by the bank.
In what has been a challenging year for traditional banks, it appears that regulators are paying more attention to ensure all banking institutions are meeting regulatory standards when it comes to their operations. Despite denying any wrongdoings so far, Cross River Bank is still required address alleged breaches within certain timeframes before further action may be taken against them if needed.