The FDIC Takes Action
The Federal Deposit Insurance Corporation (FDIC) has stepped in, asking Cross River Bank to correct its ways. This friendly reminder follows allegations that the bank failed to play by the fair lending rules in 2021. It seems they might have let their lending practices run wild, engaging in some ‘unsafe’ and ‘unsound’ banking activities.
A Consent Order Revealed
On April 28, the details of a consent order from March 8 made waves in the banking world. Cross River Bank accepted this order but, in true legal fashion, neither admitted nor denied the alleged violations. Instead, they issued a statement that sounds a bit like a political debate: “The FDIC considered the matter, and the Bank neither admits nor denies…,” which certainly doesn’t clarify much!
The Necessary Fixes
The consent order isn’t just some paperwork; it mandates that Cross River must get its house in order. This involves a thorough revamp of their internal controls, information systems, credit practices, and their whole internal audit process to ensure they’re in line with consumer protection laws.
A Study in Fair Lending
Cross River has some homework to do. They’ve got to whip up a fair lending resources study by May 7, conducted by an outsider who can give the bank an honest assessment. This study will detail everything from their growth plans to how many credit products they’re pushing out. Think of it as a report card—just without the embarrassing comments from the teacher.
Leadership’s Response
Interestingly enough, just a day before the consent order’s reveal, Cross River CEO Gilles Gade was singing a different tune, focusing on how the bank prides itself on being compliant. He insisted that the bank would keep its ‘high levels of compliance,’ while hinting that regulatory scrutiny is only going to ramp up, especially for banks that dabble in fintech.
“Cross River is the largest of these banking institutions,” Gade noted, clearly floating the idea that being big like Texas in the banking world comes with its own set of challenges. But he proudly declared that compliance is their strategic advantage. Time to see if they can back that up with action!
