Articles by deBanked Staff
Fintech Was Back on Capitol Hill
February 1, 2018A House financial services subcommittee hearing this past Tuesday put fintech and online lending back in the spotlight. The most notable witness that testified was Nat Hoopes, Executive Director of the Marketplace Lending Association (MLA). The MLA represents companies like Lending Club, Prosper, Funding Circle, Avant, Marlette Funding, Affirm, CommonBond, Upstart, PeerStreet, and StreetShares.
Hoopes testified that “this industry is effectively serving the broad American ‘middle class’ that remains our engine for economic growth and prosperity.” He also cited data from dv01. “More than one million unsecured marketplace personal loans were issued last year – with an average loan balance of approximately $14,000 and a term of greater than 4 years – far from being a small dollar, short term loan,” he said. “[Marketplace Lending Platforms] offering consumer loans do so at an average of 14.7% APR and 100% of the loans are below the 36% APR threshold.”
Prof. Adam J. Levitin, a Georgetown University Law Professor, played the role of fintech skeptic and called for state and federal regulation to address what he believed were lingering issues.
“What is new about fintechs is that they are nonbank financial companies with ready ability to acquire consumers because of the Internet,” Levitin testified. “This means that despite the regular use of buzzwords like ‘transformative’ and ‘disruptive’ in discussions about fintechs, there really isn’t anything particularly transformative or disruptive about them.
You can watch a recording of the full hearing below:
Click the links to view the testimonies of the following witnesses
- Mr. Nathaniel Hoopes, Executive Director, Marketplace Lending Association (TTF)
- Mr. Brian Knight, Director, Program on Financial Regulation and Senior Research Fellow, Mercatus Center, George Mason University (TTF)
- Mr. Brian Peters, Executive Director, Financial Innovation Now (TTF)
- Mr. Andrew Smith, Partner, Covington and Burling, LLP (TTF)
- Prof. Adam J. Levitin, Professor of Law, Georgetown University Law Center (TTF)
Kalamata Capital / Biz2Credit Lawsuit Settled
January 31, 2018An old dispute between Kalamata Capital and Biz2Credit came to an end today, according to court records. A stipulation of discontinuance with prejudice was filed that confirmed the parties had settled all matters between them.
Kalamata Capital had originally brought the action against Biz2Credit in December 2014.
Yellowstone Capital Originates $60 Million in Funded Deals in January
January 31, 2018A company email circulated by Yellowstone Capital late Wednesday afternoon said that they originated $60 million in funded deals for the month of January. That’s a 20% increase over the company’s most recent monthly totals.
The top performing sales rep grossed $302,000 in commission in January alone, the email also stated.
Yellowstone Capital is based in Jersey City, NJ.
Default Judgment Against MCA Company Vacated
January 30, 2018A default judgment against a South Florida merchant cash advance company has been vacated, according to court records. 1st Global Capital fell victim to a mishap last November when they failed to a respond to a lawsuit defendant’s counterclaim of usury.
1st Global, who learned about it through a blog post, responded by filing a motion to set the judgment aside. On January 26th, however, the Court approved a settlement reached by both parties. A stipulation was that the judgment be vacated.
The case is now closed.
Industry Stock Performance Update
January 21, 2018
Square is the big winner thus far according to the deBanked Online Lender Tracker. The company’s stock price is up 373% since its IPO and already up 22.76% YTD.
OnDeck and Lending Club by contrast are down by more than 70% from their IPOs and down 17.6% and 2.66% YTD respectively.
But the real loser so far in 2018 is Bitcoin. As of this writing, the Coinbase price of BTC is around $11,310, down more than 18% from its 2017 year-end price of $13,860. Bitcoin had previously reached an all-time high of nearly $20,000.
Meanwhile, the S&P 500 is already up 5.11% YTD. That’s about 59x more than what a Marcus Savings account returned over the same period. Marcus is Goldman Sachs’ online lending and retail online banking arm.
Drift Capital Partners Credit Facility Shows Confidence in Fintech
January 20, 2018Drift Capital Partners, LLC, an alternative asset management company, announced a new $50 million credit facility earlier this month. The funds will be used to “expand its portfolio of structured credit solutions to FinTech enabled Non-Bank Financial Services companies and allow them the opportunity to increase lending to ‘main street’ businesses,” a company release said.
Drift previously provided $25 million in financing to McClean-based Breakout Capital.
“Since its inception, Drift has been focused on developing solutions to bridge the chasm between institutional investors and main street businesses and we believe this facility is an important step toward solidifying that connection,” said McLean Wilson, Managing Partner of Drift in a company release.
CFPB Still Has Not Begun Collecting Small Business Loan Complaints
January 20, 2018Two years ago, the Consumer Financial Protection Bureau (CFPB) announced that they planned to collect small business lending complaints. However, there is still no option to complain about a small business loan on their website.
“Subject to an assessment of feasibility, the Bureau’s consumer response team will build the infrastructure to intake and analyze small business lending complaints,” an early 2016 report stated.
Although the CFPB did manage to successfully roll out a small business lending Request For Information (RFI) under former Director Richard Cordray, current acting Director Mick Mulvaney seems to have different plans for the government agency. On January 17th, he called for an introspective RFI, one in which the public can share their input on what the CFPB should be doing.
Given the philosophy of the current leadership, it could be a while before small business lending initiatives are rolled out.
Was This Bitcoin Lender Paying Returns Too Good to Be True?
January 17, 2018
As the rivers flowed red with the blood of crashing cryptocurrencies Tuesday, one company did not survive. BitConnect, a company infamous in the crypto community for paying out obscenely high returns for lending your bitcoins, may have been too good to be true.
BitConnect offered investors the opportunity to make loans on their platform and earn up to 40% interest per month PLUS an additional .25% daily. The seemingly irresistible returns were enough to allow the market cap of their own company cryptocoin (BCC) to soar to more than $2.6 billion by early January.
On Tuesday, they announced that their lending service and other segments of their business would be discontinued. Cease and desist orders issued by two states, North Carolina and Texas, are said to have played a role. Texas authorities relied more on the company’s obvious flagrant violations of securities laws while North Carolina alleged that the company’s advertised returns were a red flag for a ponzi scheme.
The BitConnect Coin lost nearly 90% of its value immediately after announcing their closure. Meanwhile, the cryptocurrency markets shed more than $200 billion in market cap the same day, according to Coinmarketcap.com. The value of Ripple (XRP), a coin speculators believe will play a role in the future of banking, was not spared. Its price has dropped by 68% since January 5th.
