The complaint stated that LendingClub violated federal laws which protect consumers from unfair and deceptive practices; LendingClub stock price dropped on the news which related to LendingClub’s promise of no hidden fees and a statement to applicants that “Investors Have Backed Your Loan” even though borrowers may not have been approved; some borrowers also experienced overdraft fees when LendingClub withdrew double payments according to the complaint. LendingClub responded to the complaint by issuing a press release. Source
There were many new regulations added in the wake of the financial crisis in an effort to prevent the next recession; with the new administration some of the regulations have been removed and now regulators are looking at lowering a key piece of regulation; the supplementary leverage ratio requires banks to maintain capital on their balance sheet as protection; bankers have pointed out that the regulation has been hurting their ability to lend and operate; some regulators agree but there are others still on from the previous administration who believe it should stay in place; there is a fear that too much deregulation will push banks to revert back to practices that contributed to the financial crisis, striking the right balance is where regulators are currently focused. Source.
Credit Karma’s main feature has been allowing users to see their credit score; the company launched a identity monitoring tool last year and is now expanding the data it scans to include the dark web; the tool will now search through 13 billion data breaches, up from 4.5 billion. Source
Ernst & Young announced a new suite of blockchain audit technologies; EY Blockchain Analyzer looks to assist audit teams to gather transaction data from multiple blockchain ledgers; Paul Brody, EY Global Innovation Blockchain Leader, tells Crowdfund Insider, “Understanding exchanges and cryptocurrencies is the first step in our ability to develop tools to test various blockchain-based business contracts. EY Blockchain Analyzer will be utilized by the auditor to analyze transactions on a blockchain and help provide insight to the finance function.” Source.
According to Nasdaq CEO Adena Friedman, the company is open to becoming a cryptocurrency exchange; Friedman stated, "I believe that digital currencies will continue to persist it's just a matter of how long it will take for that space to mature. Once you look at it and say, 'do we want to provide a regulated market for this?' Certainly Nasdaq would consider it.”; Friedman was less bullish on the future of ICOs. Source
A recent study by Harvard Business School looked into the contribution of marketplace lending on the overall lending market; while companies like Lending Club and Prosper have improved consumer access to affordable loans the study also discussed whether these types of platforms are too transparent; this transparency according to the study gives large investors who leverage the availability of data an advantage in buying loans resulting in an uneven playing field. Source
Acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney has testified on numerous occasions about the risk of data breaches; in December he helped put a freeze on data collection, though collection resumed a few weeks later without much talk or solutions; Mr. Mulvaney has not been clear on the types of breaches that have occurred and what has been done to plug the holes; experts believe this could be more about politics so the bureau is cast in a bad light. Source.
Crowdfund Insider explores Sofi’s move to offer banking service without become a bank itself; the rent a bank model allows for FDIC insured accounts while Sofi gets to own the customer experience and offer these services without the regulatory burden of a bank; Sofi Money is set to roll out in 2018 and will offer 0.96% APY on accounts; there are no account fees and they will offer free ATMs internationally; many banks still have legacy systems and lack the culture of fintech companies so it will be interesting to see how they compete. Source
Despite the rumors of a spinoff and losing Amber Baldet JPMorgan Chase is still pushing forward with their Quorum blockchain; they recently tested the issuance of a $150 million, one-year, floating-rate Yankee certificate of deposit on the blockchain, in parallel with the actual issuance of the CD according to American Banker; in regards to the spinoff the bank has yet to completely deny the rumors, though they could spinoff parts of the group and still house Quorom within the bank. Source.
Goldman Sachs has been exploring the creation of a crypto trading desk and now has hired a former crypto trader; the bank hired Justin Schmidt as a vice president and head of digital asset markets; the move is seen as another step by the bank to eventually create a crypto trading desk as they have been rumored to be exploring this for quite some time; no major bank has started a crypto trading desk yet. Source.