Cross River Bank (CRB) – a crypto-friendly financial institution stationed in New Jersey – has angered the Federal Deposit Insurance Corporation (FDIC). It’s claiming that the bank hasn’t done enough to keep traders’ and customers’ assets safe.
The FDIC Targets Cross River Bank
The FDIC is now taking enforcement action against the bank. This action has been accepted by Cross River’s board of directors. The order was filed in early March, but for some reason, failed to make it into the news until now. The order states the following:
The FDIC considered the matter and determined, and the Bank neither admits [nor] 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.
CRB has been ordered by the FDIC to boost the supervision of its management team. This means the institution must implement internal controls and credit underwriting to ensure all compliance measures are met through its lending program. In addition, the company must also assume all responsibility for transactions regardless of their sizes or the assets involved.
The FDIC is clearly worried that another crypto-based bank could wind up in the dunk tank like so many others have in recent weeks. America is in the middle of its worst banking crisis since the Great Recession of 2008, and more failed institutions could bring the U.S. to its knees.
Among the institutions that have crashed and burned as of late are Silicon Valley Bank, Signature, and Silvergate. Other institutions, such as Credit Suisse, were practically on the verge of death, but were saved at the last minute through buyouts. Not long ago, problems arose for companies like First Republic.
Working with Several Fintech Clients
An anonymous spokesperson for CRB has stated that the bank has not admitted to any wrongdoing, though it’s not denying anything either. They said that the institution is looking forward to working with the FDIC and implementing appropriate safety measures. They mentioned:
As we know, CRB is one of the foundational banks during the fintech renaissance period and partners with some of the first and biggest fintech players in existence. CRB has a very short period to answer some tough questions from the FDIC, and to do it properly with all their fintech partners. It’s [a] tall order by any measure. Every fintech partner may have to provide their individual practices with respect to Cross River’s offerings to complete the major tasks within the consent order, and it will have a large ripple effect across the industry. One of the most difficult tasks to complete is to show to the FDIC that the bank and their partners are following fair lending laws and regulations.
