Marketplace lending

Tech investors love fast-growing marketplace lenders like Social Finance, but Wall Street has taken a dimmer view of them. A huge equity fundraising round should allow SoFi to keep fueling rapid growth while remaining privately owned.

The Chicago-based online consumer lender, which focuses on borrowers with less than pristine credit histories, is getting a boost from JPMorgan Chase, Credit Suisse and Jefferies.

Regulated by multiple agencies, marketplace lenders reduce the financial system's leverage, provide greater financial transparency and ultimately deliver a better product to consumers and investors.

The global loan platforms present an extreme example of the ongoing clash between the fast-moving financial technology sphere and the staid world of financial regulation.

The Consumer Financial Protection Bureau said Springstone Financial, acquired last year by Lending Club, misled borrowers into thinking loans carried zero interest.

The Treasury Department announced Tuesday that members of the public will have an additional month to submit comments about the online marketplace lending industry.

Social Finance Inc. has hired Joanne Bradford, a veteran of the technology and media industries, as chief operating officer.

While marketplace lenders have introduced valuable innovation into financial services, they carry a fundamental flaw that threatens to undermine their business, destabilize financial markets and cause real economic hardship.

The Wall Street titan, having borne the costs of being a regulated bank for a number of years, is now looking to reap some of the benefits that come with a banking license.

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