Industry news this week centered on the CPFB’s announcement that they will accept complaints from consumers encountering problems with loans from online marketplace lenders.
We view this as continued evidence of the transition of marketplace lending from niche to mainstream. We see evidence of that transition in: i) size of origination volumes, ii) broadening of institutional participation, iii) and growth in securitizations and ratings.
The continued growth of marketplace lending depends on consumers having confidence that their transactions will be subject to equal protection—regardless of whether their loan was funded from a marketplace lender or a traditional financial institution.
There certainly are opportunities to improve regulatory harmony and clarity. We cite novel ideas in PeerIQ’s research publication, ‘A Survey of US Treasury RFI Submissions.’
Nevertheless, we believe the existing regulatory framework – by instilling consumer and investor confidence – has contributed significantly to growth of the category.
Conferences:
- PeerIQ will be at LendIt in San Francisco on April 11th, giving a presentation entitled, ‘P2P Lending Securitization Market Overview’
Industry Update:
- CFPB’s Latest P2P Scrutiny Signals Maturing Mkt, Ahluwalia Says (Bloomberg First Word, 3/9/16) Bloomberg speaks with CEO Ram Ahluwalia about the potential impact of the CFPB’s latest decision to accept complaints about online marketplace lenders
- Online Lender SoFi Launches Hedge Fund to Buy Its Own Loans (WSJ, 3/8/16) SoFi launches ‘Sofi Credit Opportunities Fund’ to create a secondary bid for loans on its platform and others
- Line Between Banks and Marketplace Lenders Thinner than You Think (American Banker, 3/11/16) As the alternative lending space matures, sources of capital—once a defining factor as most players in the space were peer-to-peer lenders—is no longer a differentiator between traditional institutions and startups
- JP Morgan Said to Offer Asset-Backed Bonds Tied to LendingClub (Bloomberg, 3/7/16) JPM is marketing a package of bonds tied to unsecured consumer loans originated by LendingClub Corp and backed by some of the $1b of loans bought from Santander earlier this year
- Marketplace Loan Financing in Doubt (AB Alert, 3/11/16) Today’s wider spreads may largely be a function of financial market volatility as opposed to marketplace-loan quality
- U.S. WLI Monthly Slipped (Businesscycle.com, 3/8/16) The level of a monthly US leading indicator index decreased to 127.7, a 38-month low, the lowest since December 2012
- Online Finance Draws on Geographical Data, Raising Questions (WSJ, 3/8/16) Fair lending rules, written before the boom in P2P lending, do not deal with the investors who fund the loans online
- Verizon Weighs Selling Bonds Backed by Customers’ Phone Payments (Bloomberg, 3/8/16) Verizon may be the first wireless carrier to issue bonds using expected monthly phone payments from customers as collateral
- Yirendai Posts Massive Q4 2015 Growth (Yahoo Finance, 3/9/16) Yirendai first quarter results show a 300% increase in origination volume
- Stop Bashing Wall Street. Times Have Changed (Bloomberg View, 3/11/16) Matt Winkler argues that Wall Street is doing more to help consumers than they have in decades
Lighter Fare:
- Google Deepmind Artificial Intelligence Beats World’s Best Go Player Lee Sedol in Landmark Game (Independent, 3/9/16) Google’s AlphaGo victory in complex Chinese game marks a major event in development of artificial intelligence