Wall Street Journal
Goldman Sachs is looking at adding banking services for its online deposit-taking platform, including checking accounts and electronic-bill payments. Whether it would issue debit cards or paper checks, though, remains to be seen (it could well stick to its savings accounts, though, and it’s not interested in pushing into credit cards). “We are focused on integrating the platform, ensuring its smooth functioning and delivering high levels of customer service,” a Goldman spokesman said. Executives have struggled to keep pace with site traffic volume this week, as well as inquiries at its Cedar Rapids, Iowa, call center. Some people have said they had trouble signing up for an account.
Marketplace lenders like LendingClub and Prosper could come under the Consumer Financial Protection Bureau’s supervision as soon as next year. The agency plans to reveal a proposal in the fall that would extend its domain of installment lenders it oversees to include the growing online lending industry, which doesn’t currently face the same level of regulatory scrutiny as traditional lending institutions. Marketplace lenders often say they’re already compliant with existing consumer protection laws, but former CFPB examiners say they could be in for a wakeup call. “If the bureau establishes authority in this area, marketplace lenders will need to quickly re-examine their regulatory compliance models and infrastructure,” said Michael Gordon, former senior counselor to CFPB director Richard Cordray.
The Labor Department unveiled a fiduciary rule requiring brokers and financial advisers to act in the best interest of retirement investors three weeks ago. On Friday, the House plans to pass a resolution to block it. Although the White House said this week the president would veto the Friday bill, opposition to the rule remains strong.
Online lender SoFi has agreed to pay a total of $2.5 million to almost 11,000 people to settle a suit over allegedly unauthorized credit checks on prospective borrowers that damaged their credit scores (though the company has denied such allegations). “Shiny and clean startups don’t stay that way very long, and you can’t avoid legal and regulatory headaches by calling your financial services business a tech company,” the FT writes. Just as the five-year-old SoFi’s year-and-a-half-long court battle began to wind down earlier this month, its publicly listed rival, Lending Club, was just starting to defend itself from a class action suit alleging it used “a sham pass through bank” to sidestep U.S. state usury laws and make usurious loans. Some online lenders partner with Utah-based WebBank since Utah doesn't have a usury cap, which allows Lending Club and its peers to lend at rates that exceed state usury caps.
Santander Consumer USA could soon retreat from its industry sector. Shares in the subprime auto-loan group have fallen from $26 last June to below $9 last month. But they came back up almost 10% Wednesday as Chief Executive Jason Kulas said he would be happy to leave some business to rivals while it focuses on remaining “disciplined.” “Clearly, if we’re losing share, it means the market is willing to do things that we’re not, as a whole,” Kulas said. “We’re seeing some of the same trends in the last quarter, where the more sophisticated players with more data have lost share to the less sophisticated, and in some cases the less disciplined players.”