28 May 2018

NYDFS subpoenas Lending Club over interest rates and fees - WSJ

19 May 2016  |  5453 views  |  0 Statue of liberty

Lending Club's woes continue, with New York state's financial services regulator joining the Justice Department in investigating the online loan marketplace, according to the Wall Street Journal.

The New York Department of Financial Services (NYDFS) has subpoenaed Lending Club asking for information about things such as interest rates, fees and the duration of loans issued to New Yorkers over the last three years, says the Journal, citing a source. The state's usury laws cap interest rates at 16%.

The regulator is also asking for details on Lending Club's underwriting practices and how it meets consumer protection laws as part of its investigation, which Lending Club says it will cooperate with fully.

The probe is unrelated to the scandal which earlier this month forced out Lending Club founder and CEO Renaud Laplanche and prompted a subpoena from the Justice Department.

That investigation stemmed from an internal review which found that $22 million in near-prime loans were sold to an institutional investor that did not want them. The application date on $3 million of the loans was altered to make them look like they met the investor's requirements. Laplanche also faced questions about an undisclosed investment he made in a company, called Cirrix, which buys Lending Club loans.

The issue has seen investors back off buying up loans, leaving Lending Club scrambling to deal with new applications and sending the outfit's share price tumbling.

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