More United States financial institutions are coming under the radar of federal authorities after the collapse of Silvergate Bank, Signature Bank and Silicon Valley Bank (SVB).
The Federal Deposit Insurance Corporation (FDIC) issued a cease-and-desist order to another crypto-friendly bank known as Cross River Bank over some unwholesome lending concerns.
To put it in perspective, FDIC claimed that the bank was involved in some “unsafe or unsound banking practices.”
FDIC Faults Cross River’s Non-Compliance With Lending Law
On the other hand, the FDIC is responsible for supporting insurance to depositors who do business with commercial banks in the U.S. and regular saving banks.
The consent order that was sent to the bank stated that;
“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 by failing to establish and maintain internal controls, information systems, and prudent credit underwriting practices.”
Top Crypto Platforms Rely on Cross River Bank
As a crypto-friendly bank, Cross River offers its services to top digital asset exchanges like Coinbase and Circle, USDC issuer. Following the sudden crackdown of Signature Bank, the U.S. arm of Binance had tried to make Cross River Bank its banking partner but the attempt failed.
The New Jersey-based financial institutions offer these crypto firms and fintechs services like payments, lending, capital and card issuing. It has however come to the notice of the independent agency that Cross River failed to maintain “internal controls, information systems, and prudent credit underwriting practices,” with all its clients.
Cross River Bank Working on its Lending Processes
In response to the publication of this consent order, a Cross River Bank spokesperson is claiming that the letter is a response to a standard review into the institution’s lending processes almost two years ago.
“We had identified areas for improvement prior to the examination and the examination identified others. Since that time, we proactively made significant enhancements to our fair lending and other programs including investing in technology and personnel. At this time many of the enhancements have been completed or will be completed in the coming months,” the Cross River Bank spokesperson clarified.