Navel gazing

10 May 2016 By Gina Chon Follow @GinaChon

The Treasury Department is the latest with ideas on regulating the likes of Prosper and SoFi. Studies are useful, but the alternative-lending industry is growing rapidly and, as Lending Club shows, starting to hit trouble. Effective supervision would help more than white papers.

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The U.S. Treasury Department on May 10 issued a white paper on marketplace lending after it received almost 100 comments on requests for information on the topic. The document aimed to address the question: “Is marketplace lending expanding access to credit to historically underserved market segments?”

The Treasury Department made six recommendations for the government and the marketplace-lending sector: supporting more effective consumer and small-business borrower disclosures; ensuring a sound user experience; promoting transparency; expanding access to credit through partnerships that are safe; supporting credit expansion through access to government data; and creating a working group of regulators to coordinate oversight of marketplace lending.

The Treasury paper was released a day after Renaud Laplanche, the founder, chairman and chief executive of Lending Club, resigned after a board probe found improper practices in the lending process.

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