The Federal Deposit Insurance Corporation (FDIC) has accused Cross River Bank of engaging in risky lending practices, according to a recent report. The FDIC claims that the bank failed to properly manage the risks associated with its lending operations, and that it also failed to maintain adequate internal controls.
The FDIC alleges that Cross River engaged in unsafe and unsound lending practices that resulted in significant losses to the bank. The regulator asserts that the bank made loans without sufficient regard for the borrowers' ability to repay, and that it relied too heavily on high-risk loans such as payday loans.
Furthermore, the FDIC claims that Cross River did not implement adequate controls to detect and manage the risks associated with these loans. Specifically, the bank allegedly failed to monitor its loan portfolio and did not implement effective risk management practices.
This is not the first time that Cross River has been accused of engaging in unsafe lending practices. In 2018, the Consumer Financial Protection Bureau (CFPB) ordered the bank to pay a $5.5 million penalty for engaging in deceptive and illegal lending practices. The CFPB found that Cross River had falsely advertised loans with low interest rates, and that it had charged borrowers undisclosed fees.
Cross River has not yet commented on the FDIC's allegations. However, the bank has previously stated that it is committed to maintaining high standards of compliance and risk management.
In conclusion, the FDIC's allegations against Cross River Bank highlight the importance of responsible lending practices and effective risk management in the financial industry. It remains to be seen how the bank will respond to the regulator's claims, but it is clear that regulatory scrutiny of lending practices is only set to increase in the years to come.