FDIC Claims Cross River Executed ‘Unsafe’ Lending Practices
The Federal Deposit Insurance Corporation (FDIC) recent statement mandated Cross River to resolve the weaknesses inherent in its lending activities. The regulator pointed out the existence of several vulnerabilities that Cross River should ‘self-correct’.
Cross River Conducted Unsafe Banking
Cross River allegedly orchestrated unsafe banking relative to the standards formulated by FDIC. The regulatory agency on deposit insurance claims that Cross River violated the banking standards by deploying unsound practices in 2021.
Cross River management is yet to respond to claims of leveraging unsound banking practices during the 2021 lending.
The FDIC issued a consent order to Cross River Bank, directing it to find in-house solutions to the weaknesses emerging in its lending. The Bank has neither accepted the accusation nor denied the alleged wrongdoing.
Correct the Vulnerabilities, FDIC Orders
FDIC revealed in the public consent order executed on Friday, April 28, tasking Cross River to self-correct the errors. The order tasks the Bank popular for the services offered to the crypto operators and fintech firms to address the lending anomaly.
The FDIC statement publicizes the consent order served to Cross River on March 8. The order accuses the Bank of noncompliance with the fair lending practices as enshrined in the banking law and regulations.
While Cross River acknowledged receiving the letter, it is yet to confess or dismiss the violations that FDIC discovered recently when reviewing the 2021 report.
In its Friday statement, the FDIC examined the anomaly and determined the matter. Nevertheless, the Cross River Bank fails to acknowledge its wrongdoing and violation of lending laws. FDIC wondered about the reasons for the Bank’s silence despite its culpability that it contravened the lending regulations.
Enhance Supervision Policy
FDIC instructs Cross River to initiate remedial actions oriented to resolve the weakness. It urges the Bank to enhance its supervision policy immediately. In particular, it mandates the Bank to reconsider the internal controls, credit underwriting, and information systems. The order illustrated the need to enhance the internal audit system and procedures to standards stipulated in consumer protection regulations.
The order obligates Cross River to promptly and internally resolve the malpractices contravening lending laws. The Bank must address all deficiencies identified to characterize its lending.
The detailed directive by FDIC requires Cross River to reevaluate the current structure. Also, the Bank should formulate processes to prevent the violations from recurring.
FDIC Imposes May Deadline to Comply with Lending Standards
FDIC imposed a May 7 deadline for Cross River to submit a report documenting its fair lending resources. The report should capture the study’s findings by an independent third party. The report should illustrate Cross River’s size, projected growth, credit products, and volume.
The report should detail the extent of third-party involvement in Cross River’s decisions. The report should outline decisions reached by third parties, particularly involving credit transactions, applications, and promoting credit products extended by Cross River.
Cross River Chief Executive Downplays Allegations of Noncompliance
The consent order came 24 hours after the Cross River chief executive Gilles Gade conveyed a statement on Thursday, April 27. He failed to mention the allegations illustrated by FDIC.
Gade restated the devotion of Cross River to uphold compliance as supreme. He alleged bias in recent regulatory scrutiny, which he admitted would only get tougher for crypto-friendly banks prompted by the collapse of Silicon Valley Bank.
Gade admitted that Cross River is among the leading banking institutions. Its scale is bound to attract regulatory examination to its business elements continuously.
Gade added that he views Cross River setting pace in compliance capability as a core advantage. He admires Cross River’s compliance levels, transparency, observance, and responsibility.
Gade notes that the consent order arose days before Cross River partnered with Circle. Circle, the firm behind USD Coin (USDC) stablecoin, would, in a few days on March 13, reveal partnering with Cross River to obtain banking services.
Gade confessed that Circle sought a Cross River partnership following the sudden collapse of Silver Valley Bank.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
