Earlier this year, the Federal Deposit Insurance Corporation (FDIC) issued an enforcement action against Cross River Bank, noting it had engaged in unsafe and unsound banking practices related to its compliance with Fair Lending laws and regulations by failing to establish and maintain internal controls, information systems, and prudent credit underwriting practices.
One day prior to the public release of the consent order, the CEO of Cross River Bank mentioned how regulators are monitoring firms that serve fintechs amid the recent volatility in the banking sector. He also stated, “Regulatory scrutiny on banks in general is increasing and the events with [Silicon Valley Bank] will only expand those efforts with a specific focus on banks that support fintech.” In the consent order, regulators are reviewing credit products offered by both the bank and the third party fintech partners. Many people are viewing this as a sign the federal regulators are attempting to narrow the gap in how financial institutions and non-banks are regulated.