Congressional Oversight Committee Investigates Cross River Bank Over PPP Fraud

On May 27, 2021, Representative James Clyburn, Chairman of the House Select Subcommittee on the Coronavirus Crisis, sent a formal letter to Cross River Bank requesting information about its role in facilitating potentially fraudulent Paycheck Protection Program (PPP) loans. Cross River Bank is a prominent BaaS and partner bank that enabled numerous fintech platforms to originate PPP loans during the pandemic. The congressional inquiry focused on whether Cross River's fintech-driven lending model had adequate controls to prevent fraud in the government-backed lending program.

Cross River had become one of the largest PPP lenders by volume, largely through its fintech partnerships and technology-enabled loan processing. The investigation raised broader questions about oversight and compliance responsibilities in bank-fintech partnership models, particularly when distributing government funds. This scrutiny foreshadowed increased regulatory attention on BaaS partner banks and their fintech relationships in subsequent years.

The inquiry underscored the tension between rapid, technology-enabled lending scale and traditional banking compliance obligations.