Articles by deBanked Staff
Barbara Corcoran, OnDeck Contest Final Aired on Rachael Ray Show
December 6, 2016The OnDeck “Seal of Approval” contest led by company spokesperson Barbara Corcoran recently came down to one final challenge and the results were aired on the Rachael Ray Show on Tuesday.
Three small businesses were featured and each won $10,000 paid for by OnDeck. Corcoran couldn’t mention the company enough times. This kind of collaboration and publicity is probably the best kind of marketing an alternative lender can get, not to mention a great opportunity for small businesses. Watch the TV segment of it below:
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The OCC Wants Online Lenders to Become Limited Purpose Banks
December 2, 2016
Earlier today, Comptroller of the Currency Thomas J. Curry announced that the OCC will move forward with chartering financial technology companies that offer bank products and services that meet their high standards and chartering requirements.
“We have decided to move forward and to make available special purpose national charters to fintech companies for a few basic reasons,” he began saying during a speech at the Georgetown University Law Center. “First and foremost, we believe doing so is in the public interest. Fintech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters.”
Curry also responded to critics who argued that a limited charter would put fully regulated banks at a disadvantage competitively. “The reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision,” he said. “Granting national charters to the companies who desire and warrant one doesn’t weaken the competitive position of existing banks or the dual banking system. In some ways, it levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones.”
Applying for this charter would be optional, not a requirement.
Like the Treasury RFI last year, the OCC has put up an official 13-question Request For Comment that is open until January 15th.
Those questions are:
1. What are the public policy benefits of approving fintech companies to operate under a national bank charter? What are the risks?
2. What elements should the OCC consider in establishing the capital and liquidity requirements for an uninsured special purpose national bank that limits the type of assets it holds?
3. What information should a special purpose national bank provide to the OCC to demonstrate its commitment to financial inclusion to individuals, businesses and communities? For instance, what new or alternative means (e.g., products, services) might a special purpose national bank establish in furtherance of its support for financial inclusion? How could an uninsured special purpose bank that uses innovative methods to develop or deliver financial products or services in a virtual or physical community demonstrate its commitment to financial inclusion?
4. Should the OCC seek a financial inclusion commitment from an uninsured special purpose national bank that would not engage in lending, and if so, how could such a bank demonstrate a commitment to financial inclusion?
5. How could a special purpose national bank that is not engaged in providing banking services to the public support financial inclusion?
6. Should the OCC use its chartering authority as an opportunity to address the gaps in protections afforded individuals versus small business borrowers, and if so, how?
7. What are potential challenges in executing or adapting a fintech business model to meet regulatory expectations, and what specific conditions governing the activities of special purpose national banks should the OCC consider?
8. What actions should the OCC take to ensure special purpose national banks operate in a safe and sound manner and in the public interest?
9. Would a fintech special purpose national bank have any competitive advantages over full service banks the OCC should address? Are there risks to full-service banks from fintech companies that do not have bank charters?
10. Are there particular products or services offered by fintech companies, such as digital currencies, that may require different approaches to supervision to mitigate risk for both the institution and the broader financial system?
11. How can the OCC enhance its coordination and communication with other regulators that have jurisdiction over a proposed special purpose national bank, its parent company, or its activities?
12. Certain risks may be increased in a special purpose national bank because of its concentration in a limited number of business activities. How can the OCC ensure that a special purpose national bank sufficiently mitigates these risks?
13. What additional information, materials, and technical assistance from the OCC would a
prospective fintech applicant find useful in the application process?
Read the OCC’s 17 page report on the matter. The Request For Comment and submission instructions are at the end of it.
Nude Photos Used as Collateral for Loans, Leak
December 2, 2016Perhaps the only thing worse than sending a nude photo of yourself to a lender as collateral is learning that the photo had been leaked on to the internet. In China, some online lenders hold on to nude photos of their borrowers (typically women) to use as leverage to pay up. If they don’t, the photos may be distributed to the borrower’s friends and family members to shame them. While this practice is certainly not common, about 10 gigabytes worth of such photos from loan platform Jiedaibao were leaked on to the internet recently, according to People’s Daily
Jiedaibao says that loans with such terms are private peer-to-peer loans that they can’t regulate. “We have called the police and collected evidence to protect the company’s reputation. Those who leaked the nude pictures will be punished according to law,” they said in a public response.
Chinese regulators have been working hard to address the growth of p2p lending after investors have lost billions through fraud. P2P lender Ezubao for example, turned out to be a $7.6 billion ponzi scheme. Meanwhile, Moodys reported that by the end of last year, a whopping 800 p2p loan platforms in China had already failed or were facing liquidity issues. In response, banking regulators want all p2p lenders to register with the government.
Bitcoin-based P2P Lending Platform BitLendingClub Shuts Down
December 2, 2016BitLendingClub (not to be confused with Lending Club) has shut down their bitcoin-based p2p lending platform, citing regulatory pressure. A message posted on their website says, “over the last year or so, the regulatory pressures has been increasing to the point that it is no longer feasible to maintain the operation of the platform. We are regretfully announcing that we will have to begin terminating the services effective immediately.”
BitLendingClub received a $200,000 seed investment from European VC fund LAUNCHub just two years ago. The company changed its name to LoanBase in September 2015 but then changed it back only a few months ago.
This was no small experiment either. Kiril Gantchev, BitLendingClub’s CEO, claims on his LinkedIn profile that the company made more than 10,000 loans worth more than $8 million dollars, originating from 90 countries. The company’s website claims an average APR of 192% and a default rate of nearly 12%.
In March however, the company stopped lending to people in several countries including Iran, Ireland and Nigeria due to elevated fraudulent activity.
It’s unclear what “regulatory pressures” caused them to shut down but the company appears to have been operating from San Francisco despite originally incorporating in Bulgaria. A search for a California lending license connected to them yielded no results. After the US, the country with the 2nd most borrowers on the platform was Venezuela followed by Brazil, the UK and India.
“Investors should understand the risks involved when making bitcoin loans,” their website warned. “The main risks are default and failure to collect.” they added.
The Trump Effect and Bank Partnerships: Noah Breslow Chimes in on BloombergTV
November 30, 2016On BloombergTV in Canada, OnDeck CEO Noah Breslow answered questions about a Trump presidency, rising interest rates, and the future of bank partnerships. “Online lending is a secular trend that’s not going away,” Breslow said. “Any product that can be delivered over the internet will be delivered over the internet and money is the ultimate digital product.”
Watch the clip below:
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Brief: LendIt Brings First Fintech Awards to the Industry
November 28, 2016
Marketplace lending conference LendIt, has announced the first fintech industry awards and is inviting nominations to recognize top-performing companies and executives.
Nominations are now being accepted (closes December 21st) for 18 different categories including executive of the year, fintech woman of the year, emerging consumer lending platform and most innovative bank. The award ceremony will be held during LendIt’s 2017 conference in March.
“The lending industry is entering its 2.0 phase, after maturing in 2016,” said Peter Renton, co-founder and chairman of LendIt in a statement. “As we seek to connect the global online lending community and foster innovation and industry growth, we must recognize those that are making the biggest contributions and innovations and moving our industry forward.”
The entries will be judged by a panel of 30+ industry experts including Gilles Gade, CEO of Cross River Bank, Glenn Goldman of Credibly, and Angela Ceresnie, COO of ClimbCredit.
Goldman Sachs Goes After Online Lenders With Video Ads
November 25, 2016“No fees. Ever,” states one of Marcus’ new video ads. Marcus is Goldman Sachs’ new online consumer lending division and the value proposition is pretty compelling. Most other online lenders for example, strongly rely on origination fees, but Marcus doesn’t charge them nor any other kind of fee. View their four campaign videos below:
Online Loan Middleman Just As Culpable As the Lenders, Federal Court Rules
November 21, 2016A CFPB lawsuit against a payday loan lead generator survived dismissal last week, despite the US Court in the Central District of California acknowledging the company’s role as a “middle man” in the lending process. T3Leads and several people connected to the company are alleged to have deceived consumers, in part such that “they allowed consumers to be exposed to lenders that could cause them substantial harm.”
The court ruled that T3Leads was a service provider as contemplated by the Consumer Financial Protection Act and is therefore bound to the laws therein. The case will now proceed to discovery.
Notably, the court also agreed with the recent opinion of the D.C. Circuit in finding the CFPB’s structure unconstitutional. Nonetheless they did not believe the remedy was to toss this case or prevent the CFPB from carrying out its operations. Instead, they ruled that the CFPB’s director must report to the President of the United States to come into compliance with Article II of the US Constitution. The CFPB has refused to comply and is already appealing the D.C. Circuit’s decision.
The CFPB’s quest for power however, may come at a cost. That’s because President-elect Trump has pledged to repeal and replace the Dodd-Frank Act, the law through which the CFPB’s power is vested.
Despite the Consumer Financial Protection Act’s exemption on vendors that simply provide advertising space, a decision Google made earlier this year to ban all payday lenders could have something to do with their fear of being labeled a middle man and covered service provider.
