Monday, September 07, 2015

On-line lenders

FT looks at on-line lenders and the tendency to seek institutional funds and to make money only from the intermediation. 

Take Lending Club, for instance. In the second quarter, it had revenues of $96m, of which $86m came from transaction fees. Strip those out and you would have almost nothing to pay the company’s $100m in expenses. Were it to slow or stop lending, the losses would quickly pile up.

Though this is worrying for Lending Club and the investors, it is not such a systematic issue as it does not leave bad loans and a weakened financial institution.  It suggests that an adjustment would be clean and swift. 

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