Cross River Bank, a leading digital bank, has been making headlines lately due to an FDIC enforcement action. The bank was fined $100 million for violating consumer protection laws.
This is not the first time Cross River Bank has faced scrutiny from regulators. In 2020, the bank was fined $175 million for similar violations.
The FDIC's action against Cross River Bank highlights the importance of consumer protection in banking. It shows that regulators are serious about holding banks accountable for their actions.
The fine imposed on Cross River Bank is a significant blow to the bank's reputation and finances. It's likely to have a major impact on the bank's operations and future growth.
FDIC Enforcement Action Against Cross River
Cross River Bank has entered into a consent order with the FDIC over allegations of unsafe fair lending compliance practices. This is a significant development that suggests the bank's partnership with fintech companies may be under scrutiny.
The consent order requires Cross River Bank to strengthen its lending and third-party compliance controls. This includes increasing supervision and oversight of internal controls, information systems, credit underwriting practices, and internal audit systems.
Cross River Bank must also comply with credit product and third-party disclosure and non-objection processes. This means the bank must identify all its credit products and third parties offering its credit products and seek FDIC's written non-objection before offering new credit products or partnering with new third parties.
The consent order imposes extensive due diligence obligations on Cross River Bank when offering new credit products or permitting new third parties to offer its products. This is a significant requirement that suggests the bank must be very careful when partnering with other companies.
Cross River Bank must prepare assessments and reports on its information systems and fair lending compliance. This includes engaging independent third parties acceptable to the FDIC to prepare certain assessments and reports on the bank's information systems and fair lending compliance.
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Cross River Bank's Regulatory Status
Cross River Bank's Regulatory Status is currently under scrutiny due to a consent order with the FDIC.
The bank entered a consent order to resolve claims of unsafe or unsound fair lending compliance practices.
Cross River Bank allegedly failed to establish and maintain internal controls, information systems, and prudent credit underwriting practices.
The consent order requires Cross River Bank to make three immediate changes to strengthen its lending and third-party compliance controls.
CRB must increase supervision and oversight of internal controls, information systems, credit underwriting practices, and internal audit systems relating to its marketplace lending.
The bank's fair lending compliance obligations will now include marketing practices associated with its credit products.
Cross River Bank must consider the terms describing a credit product in its marketing materials and contractually require the recordkeeping of marketing materials in its agreements with new third parties.
The bank must also oversee the terms and conditions in marketing materials about a credit product distributed by a third party.
CRB must comply with credit product and third-party disclosure and non-objection processes.
The bank must identify all its credit products and all third parties offering its credit products and seek FDIC's written non-objection before offering new credit products or partnering with new third parties.
Cross River Bank must prepare assessments and reports on information systems and fair lending.
The bank must engage independent third parties acceptable to FDIC to prepare certain assessments and reports on CRB's information systems and fair lending compliance.
These assessments will evaluate whether each third party offering one or more CRB credit products for a six or months complied with applicable fair lending laws and regulations.
Curious to learn more? Check out: A Written Contract between Two Parties Is
Frequently Asked Questions
What is the health rating of Cross River Bank?
Cross River Bank has a B+ health rating, indicating a strong financial stability. Learn more about our health rating and what it means for your banking experience.
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