LendingClub
LendingClub is an American peer-to-peer lending company headquartered in San Francisco, California. It was the first peer-to-peer lender to register its offerings as securities with the Securities and Exchange Commission (SEC), and it operates an online marketplace that facilitates loans between borrowers and investors.
History
- 2006: Founded by Renaud Laplanche and Tim Mayopoulos. Initially, it was not registered with the SEC, which led to concerns about investor protection.
- 2008: Introduced the platform to the public after a private beta phase, allowing retail investors to invest in personal loans.
- 2010: Registered with the SEC, becoming the first peer-to-peer lender to do so, thereby offering a higher level of regulatory oversight.
- 2014: LendingClub went public with an initial public offering (IPO) on the New York Stock Exchange under the ticker symbol LC.
- 2016: Faced regulatory scrutiny and leadership changes after issues with loan quality and compliance were revealed, leading to the resignation of CEO Renaud Laplanche.
- 2018-2019: LendingClub continued to navigate through regulatory challenges, restructured its operations, and focused on improving credit quality and investor returns.
- 2020: Announced the acquisition of Radius Bancorp, which was a strategic move to become a digital bank, allowing it to offer a broader range of financial services including banking products.
Business Model
LendingClub operates on a marketplace model where:
- Borrowers apply for loans, and their creditworthiness is assessed.
- Investors can browse through anonymized loan listings, which include details like loan amount, interest rate, and borrower's credit grade.
- Once a loan is funded by investors, LendingClub services the loan, collecting payments from borrowers and distributing the interest and principal to investors.
- The company earns revenue from fees charged to both borrowers and investors, as well as from loan servicing.
Impact and Controversies
- Impact: LendingClub has been credited with democratizing access to credit, allowing individuals to borrow directly from a wide pool of investors, potentially at lower rates than traditional banks.
- Controversies: The company has faced criticism and legal action related to its loan quality, data manipulation, and compliance issues, particularly in the aftermath of its IPO and subsequent leadership changes.
External Links
See Also