FDIC hits Fort Lee bank with cease and desist order, cites 'unsound banking practices'
Cross River Bank in Fort Lee was issued a cease and desist order by the Federal Deposit Insurance Corp. over allegedly “unsafe or unsound banking practices” related to fair-lending laws.
The Bergen County bank is a partner with many financial technology and crypto firms. The bank allegedly failed to establish and maintain “internal controls, information systems, and prudent credit underwriting practices,” the FDIC said Friday.
The 34-page consent agreement is dated March 8 but was released to the public on Friday, April 28. In it, Cross River does not admit or deny any of the charges brought forward in the document.
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According to the consent decree, the bank’s board has to increase supervision of its internal controls, credit underwriting process and internal audit process. A spokesperson didn’t immediately comment on the record for this story.
The news comes on the heels of three recent bank failures this year — Silicon Valley Bank, Signature Bank and now First Republic Bank.
Over the weekend, the FDIC accepted JPMorgan Chase’s bid to buy the remaining assets from First Republic Bank after they were seized by U.S. regulators.
“Regulatory scrutiny on banks in general is increasing and the events with SVB will only expand those efforts with a specific focus on banks that support fintech,” Cross River CEO Gilles Gade said in an April 27 statement.
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“Cross River is the largest of these banking institutions and as such, we have regulatory examiners reviewing some elements of our business on a continuous basis,” Gade said.
Christopher Maher, chair of the New Jersey Bankers Association, told USA TODAY Network New Jersey partner the Asbury Park Press that consumers nationwide moved some $300 billion in deposits from community banks to giant banks in the aftermath of the failures, leaving local banks with less money to lend to Main Street.
The impact on New Jersey bank deposits isn't yet clear. But "when you move $300 billion, you're going to reduce credit availability in some areas," said Maher, who also is chairman, president and chief executive officer of Toms River-based OceanFirst Financial Corp.
This article originally appeared on NorthJersey.com: Cross River Bank in Fort Lee NJ accused by FDIC of malpractice
