NEW YORK–The New York Department of Financial Services said it plans to look into various online lenders to see whether they should be licensed in the state.
The regulator has already launched a probe of LendingClub, and the Department indicated that the responses it receives to a subpoena sent in mid-May to LendingClub will provide some guidance on whether additional regulatory scrutiny may be required.
According to Reuters, the NYDFS subpoenaed San-Francisco based LendingClub, a so-called peer-to-peer lender, seeking information about loans it issued to New Yorkers since May of 2013. Among the information being sought is that related to the interest rates that LendingClub charges, underwriting standards and details about how the company verifies borrower information.
LendingClub has until June 21 to respond.
Among the issues at which the NYDFS is looking into is whether LendingClub’s practices comply with the state's usury laws, which cap interest rates at 16%. LendingClub charges interest rates as low as 5% and as high as 29%, according to the company's data, Reuters reported. LendingClub makes loans through Utah-based webBank, where there is no interest rate cap.
Numerous analysts have suggested to credit unions in recent years that regulation of the P2P lending space is inevitable.