The Evolution of Marketplace Lending

May 26, 2016

Marketplace lending in the U.S. continues to evolve at a rapid pace as a result of legal and regulatory developments and market forces. In particular:

  • The Consumer Financial Protection Bureau recently ramped up its focus on marketplace lending, increasing the likelihood of future regulatory and enforcement actions.
  • One of the largest marketplace lenders recently restructured its relationship with its issuing bank out of concern that the Second Circuit’s decision in the Madden v. Midland Funding case could be construed to prohibit marketplace lenders from preempting state usury laws.
  • The funding model for marketplace lending continues to evolve, as evidenced by one lender’s establishment of an affiliated hedge fund to purchase marketplace loans it originates.
  • Earlier this month, the Department of Treasury (the “Treasury”) issued its white paper on online marketplace lending, after issuing a request for input from the public last summer. See Dechert OnPoint, US Treasury Eyes Online Marketplace Lending.

Read "The Evolution of Marketplace Lending."