FDIC alleges Cross River engaged in 'unsafe' lending practices

The Federal Deposit Insurance Corporation (FDIC) has requested Cross River Bank – known for its services to fintech and crypto firms similar Visa and Coinbase – to "self-correct" and "appropriately address" weaknesses successful its lending activities.

On April 28, the FDIC made nationalist a consent order executed with Cross River Bank connected March 8, alleging that the slope engaged successful “unsafe” oregon “unsound” banking practices related to its compliance with applicable just lending laws and regulations successful 2021.

Despite acceptin the consent order, Cross River has yet to admit oregon contradict the violations discovered successful the 2021 study of examination. It was noted:

“The FDIC considered the substance and determined, and the Bank neither admits oregon denies, that it engaged successful the unsafe oregon unsound banking practices related to its compliance with applicable just lending laws and regulations”.

The bid states that the slope indispensable instantly instrumentality enactment to “increase” its absorption connected the bank’s “system of interior controls, accusation systems, recognition underwriting practises, and interior audit systems related to the user extortion laws and regulations.”

Furthermore, the slope is required to show its compliance with just lending laws and promptly “self-correct” immoderate violations.

Cross River was ordered to “appropriately address” the deficiencies and weaknesses identified successful the 2021 study of introspection and make processes to guarantee these weaknesses don’t look successful future.

The FDIC executed the consent bid with Cross River Bank connected March 8. Source: FDIC

The FDIC requested that Cross River afloat comply with the consent bid successful a “timely manner.”

Just 1 time earlier the consent bid was made public, Cross River’s CEO Gilles Gade released a statement connected April 27, which did not notation the FDIC allegations.

Gades emphasized that regulatory scrutiny connected banks is increasing, suggesting that Cross River takes capable measures to guarantee “transparency, and responsibility.”

“Cross River is the largest of these banking institutions and arsenic such, we person regulatory examiners reviewing immoderate elements of our concern connected a continuous basis” Gades stated.

“We presumption our compliance capableness arsenic a strategical vantage and are arrogant to pb our manufacture successful maintaining the highest levels of compliance, transparency, and responsibility” helium wrote.

Related: Crypto-friendly banks mismanaged accepted risks, FDIC caput tells Senate hearing

The bid was initially issued to the slope lone days earlier Circle, the stablecoin issuer down USD Coin (USDC), partnered with Cross River for banking services ­– which was announced connected March 13.

Circle had sought the caller partnership, aft its erstwhile provider, Silicon Valley Bank, collapsed connected March 11.

Magazine: Unstablecoins: Depegging, slope runs and different risks loom