The no-action letter shows that the CFPB is open to alternative data being used to expand access to credit data; Upstart will report lending and compliance information to the CFPB to mitigate risk to consumers and aid in the Bureau’s understanding of the real-world impact of alternative data on lending decision making; the no-action letter relates to enforcement of the Equal Credit Opportunity Act and Regulation B; Upstart shares in their application how powerful using data points outside of just credit reports is in reducing borrowing rates. Source
The worst week in SoFi‘s history is coming to an end. The company announced today that Mike Cagney has stepped down as CEO effective immediately. This follows the news on Monday that Cagney would be stepping down as CEO by the end of the year. But the bad news this week kept escalating and the board decided it needed to take action now. Source.
deBanked has taken the Inc 5000 list and provided a table of the top alternative small business companies by revenue; the top 5 include Square, OnDeck, Kabbage, Swift Capital and National Funding. Source
Arthur Levitt, former Chairman of the Securities and Exchange Commission, says the recent scandal at SoFi has cost them approval of their special bank charter; he tells the FT, “So for a company as aggressive as SoFi, I think the chances of that happening were slim. Now they become almost impossible.” Source
Following the Equifax hack, Credit Karma is offering a free service that will alert customers if their information has been compromised; the service is currently being tested and will be available sometime in October; the company accelerated the launch due to the large breach at Equifax and has seen a 50% increase in signups following the hack. Source
The recent PeerIQ weekly newsletter discusses the departure of Mike Cagney from SoFi, the Goldman & Mosaic deal and provides an analysis of recent SoFi (SCLP 2017-5) and Lending Club (CLUB 2017-P1) securitizations. Source
According to the WSJ, clients have been withdrawing more money than expected from the hedge fund; Pine River was best known for its profits after rebounding government-backed mortgages following the financial crisis; Pine River manages roughly half of the $15 billion it managed in 2015. Source
A writer in a Bloomberg opinion article believes that the next financial crisis will have its roots in Silicon Valley, not Wall Street; author cites that fintech companies are vulnerable to rapid, adverse shocks compared to Wall Street banks because fintech firms are small and undiversified; article also shares that fintech companies are more difficult to monitor and that the fintech industry has not developed the set of unwritten norms and expectations that guide traditional financial institutions. Source