Guest post by Richard P. Eckman, Gregory J. Nowak, Esuga T. Abaya, and Ashleigh K. Reibach – Pepper Hamilton LLP
On July 16, 2015, the U.S. Department of the Treasury (the Treasury) issued a notice and request (the Request) for public information concerning the role of marketplace lending in the financial services industry. Treas. Notice 138 (July 20, 2015). Marketplace lenders, or “peer-to-peer lenders” as they are often referred to, are online platforms that match investors with borrowers. Some platforms cater to small business borrowers, others focus on consumer lending, and others focus on real estate lending, receivables factoring, student loan origination and much more. The marketplace lending industry originated $12 billion in loans of various types in 2014, two platforms have gone public, and several securitizations of these loans have been packaged and sold. Yet, the industry has remained largely ignored by policymakers and regulators on any systemic basis — until now. In the consumer area, there are a host of federal laws that apply to loans made to consumers, and many states also act to protect borrowers, regardless of who the lender is. Nevertheless, the state-by-state patchwork of laws and regulations, and the application of securities and banking laws designed for other purposes and generally applicable here, have caused slower evolution of this marketplace than would otherwise have been possible had the “rules” been more carefully and robustly designed.