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Laplanche Resigns: LendingClub chief executive and chairman Renaud Laplanche resigned after an internal review of loan sales found $22 million in near-prime loans to a single investor, against that investor's instructions. Separately, the investigation also showed a failure to report personal interests held in a third-party fund to the board's risk committee, as the company was mulling an investment in the same fund. President Scott Sanborn will become acting CEO and director Hans Morris has been named to the newly created role of executive chairman. The resignation coincides with the release of its first quarter earnings. The company posted a $4.1 million profit, or one cent per share, matching analysts' estimates. That was compared to a year ago when profits fell by $6.4 million (two cents per share). Revenue nearly doubled to $152.3 million. The company has beat earnings expectations each quarter since it went public in December 2014, but its shares are down 35% this year and 68% since its IPO. Meanwhile, its competitors – like Prosper, Avant and On Deck – have reported slowing investor demand for loans or a drop in lending volume this year. Wall Street Journal, Financial Times, New York Times
Wall Street Journal
Online lenders have targeted borrowers from elite universities because of their probably low default rates, focusing on those with graduate degrees, high credit scores and high incomes. But student borrowers are proving especially keen to pay off their debt faster and have been doing so as much as three times faster than the lenders expect. Darien Rowayton Bank in Darien, Conn., has a national online lending platform where it says student-debt borrowers are paying 15% to 17% more than they are obligated each month. Since marketplace lenders sell loans in bulk to investors instead of holding them like a traditional bank, the thinking is investors will perceive this pool of highly educated borrowers to be more reliable. But the seemingly anti-debt attitude of student borrowers could make business difficult for lenders and investors planning to collect higher interest payments over time.
Hillary Clinton raised $344,000 in campaign contributions from Wall Street in March, bringing her total funding from the financial industry to $4.2 million, as Wall Street donors' support shifts from Republican candidates who have dropped out of the race, including Florida Gov. Jeb Bush and Florida Sen. Marco Rubio. Research shows the Democratic front-runner received 53% of the donations made by Wall Street in March, compared with 32% last year and 33% in January through February.
Ride-hailing startups are putting pressure on yellow cab borrowers to keep up with their medallion loan repayments – and banking institutions are feeling the pressure too. The biggest impact has been on credit unions. Loan delinquencies at Melrose Credit Union, for example, more than doubled in the first three months of 2016. At the smaller taxi financier Lomto, loan delinquencies more than tripled. In the same period, Signature Bank in New York cited taxi loans as the main concern of its $53 million rise in troublesome loans to $403 million. Now, Melrose and Lomto are taking New York authorities to court. New York City taxi drivers are required to have medallions, or licenses, to pick up passengers but authorities have controlled how many medallions they issue. "Companies like Uber have been able to quickly construct parallel unlicensed taxi networks," the plaintiffs said, "without many of the significant regulatory burdens and expenses that medallion taxicabs are subject to."
Barclays Bank is partnering with corporate payment services company Bottomline Technologies to give U.K. businesses a mobile payments platform that will allow them to send customers payments, like refunds, instantly and directly without the need for their personal bank account details. For example, Northern Gas Networks uses Barclays' Pingit app – which lets account holders at any bank "ping" money to other individuals and businesses – to pay customers who have gone more than 24 hours without gas. Northern Gas doesn't hold many of its customers' bank details. This way it can reimburse customers instantly instead of doing so through a lengthy check process. Pingit released an enterprise service a year ago but required businesses to implement it themselves within their own payment systems. The collaboration with Bottomline would allow an easier setup of the app on companies' existing payments infrastructure.
New York Times
Jamie Dimon seems to be warning customers against fintech startups. Companies like Mint, Acorn and Penny take more customer data than necessary, sell it to outsiders for their own benefit and continue taking data for years, even from inactive accounts, the JPMorgan Chase chief executive said in a shareholders letter posted online last month. And if customers lose their money to fraud, some of these fintech startups make them take the hit. Ron Lieber, author of this Your Money piece, seeks to debunk each of these "theatrical" claims as he asks: Why is the company making all of this noise now? Consumers are less concerned than ever about third parties accessing their financial information. He points to a JPM job listing for a vice president in a new unit that will "leverage JPM proprietary data assets into opportunities" for the bank and "enable end users to make better decisions." That sounds awfully similar to what many of these startups do, Lieber says.