JP Morgan purchased ~$1 Bn worth of Lending Club loans, above par.

Upon reflection, ‘Silicon Valley is Coming’ is not so much a battle cry as it is a dinner invitation.

This is tremendous validation for the thesis of marketplace platforms marrying their low-cost online platforms with low-cost bank capital. It also represents independent validation of underwriting and servicing standards from a highly regulated owner and operator of consumer credit risk.

In short order, JPM has struck deals with leading platforms including Avant, Lending Club, and OnDeck. Citi has led on securitization deal issuance with Prosper. The only remaining major US consumer bank/dealer on the sidelines (so far) is BAML. BAML has a strong structured products group so perhaps that will change in the future.

The rapid proliferation in sponsors and structures underscores a need for standards and transparency. And we’re excited to work with the market’s leading participants to ensure the smooth functioning of these markets in both benign and distressed environments.

Conferences:

  • PeerIQ attended Context Summits Workshop on Alternative Lending last week where Ram moderated a panel that discussed the need for institutional infrastructure for HFs investing in marketplace lending
  • PeerIQ will be speaking at the New York Hedge Fund Roundtable on February 22nd on the topic of how large investors can access the P2P lending market

Industry Update:

  • Arrests in China over $7.6bn Ponzi scheme (FT, 2/1/16) The Ezubao fraud highlights the uneven quality of platforms across China—the world’s largest P2P market—and the need for transparency and independent analytics

Lighter Fare:

  • A Kickstarter campaign – the Jolly Roger Telephone Co. – has created an AI / Robot that fools telemarkers into thinking they are a real person. A surprising resolution for the Turing Test