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Former Treasury Secretary Lawrence Summers Joining Lending Club Board

by Peter Renton on December 13, 2012


Former Treasury Secretary Lawrence Summer Joining Lending Club Board
One of the most powerful positions in finance in this country is the Secretary of the Treasury. This person is the principal economic advisor to the President and is the head of the Department of the Treasury. Nominated by President Clinton in 1999, Lawrence Summers served as Treasury Secretary until George W. Bush took office in January 2001. Now, he will be joining the board of Lending Club.

It was just back in April when Lending Club announced John Mack would be joining their board. Now, with Summers they have someone with even more impressive credentials on their board. Summers’ resume also includes stints as chief economist at the World Bank, Director of the White House National Economic Council under President Obama and, of course, his controversial tenure as President of Harvard University.

This is another great move for Lending Club, something that helps brings them ever more closer to the financial mainstream. With two board members now with impressive “old guard” experience Lending Club is positioning itself to become part of the financial establishment. I am sure this makes many investors, large and small, feel more comfortable with their decision to invest in p2p lending.

You can read the official press release here as well as coverage on Techcrunch.

{ 15 comments… read them below or add one }

Ben December 13, 2012 at 9:52 am

Does it not worry anyone else that LendingClub is hiring people from Big Wall Street? Wall Street became too complex for its own good with derivatives that nobody could understand and huge bets made by investment banks that led to the economy we have today. Don’t forget that Summers has been blamed by many, most specifically in the book “Confidence Men” by Ron Suskind, for driving the nation further into a hole. What’s going to happen with him on the board of LendingClub- less regulation, looser restrictions on who can apply for loans? It seems more and more like LendingClub is moving towards being a tool for institutional investors and moving away from the average investor who it was supposed to help.

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Dan B December 13, 2012 at 1:10 pm

I’m not sure how you’ve come to believe that LC exists or has ever existed to help the “average investor”.

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Peter Renton December 13, 2012 at 2:58 pm

Ben, I thought the same thing Dan did when I read the last sentence of your comment. Lending Club started off as a peer to peer lender, lending purely between individuals, but it was never their intention to remain that way.

This is why I think the Larry Summers appointment is a good thing. Lending Club is not looking to stay on the fringe of the financial system. They want to tear the old system down and rebuild it with a model that is far more efficient. So, if you are looking to become an integral part of the financial system issuing tens of billions of dollars in loans every month you need people with some serious economics credentials.

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Peerlend December 13, 2012 at 3:13 pm

What a pig.

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Peter Renton December 13, 2012 at 3:16 pm

Who? Me? Ben? Dan B? Larry Summers? Lending Club? Please don’t make a derogatory statement like that without some kind of explanation – it is not adding anything to the conversation.

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Philip December 13, 2012 at 11:17 pm

I share your concern about the direction LendingClub is leaning. This appointment gives LC credibility within the industry and probably gets LC on track for an expansion of services – but I think it highlights questions about what LC stakeholders want in the near future and whether quality for the small investor will be there as LC grows up under established leadership. Coming on the heels of changes made for institutional investors, a trend may be emerging about who will be the foundation of tomorrow’s LC.

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Peter Renton December 14, 2012 at 4:03 pm

Phillip, In one of the interviews Laplanche did yesterday he said that he expects the percentage of institutional investment to increase to 70% in the future. So, it is clear who will be in the majority. But as long as the returns are still there for the average investor like you and me I will continue to invest. And of course, I will be urging more consideration given to people like us. Every conversation I have had with LC management has made it clear they don’t want to be just a company for institutional investors.

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Mike December 13, 2012 at 12:32 pm

Larry brings with him name recognition, and a big ego. Tends not to ‘play well with others’.

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Peter Renton December 13, 2012 at 3:00 pm

Mike, Yes his reputation for stirring things up is well known even before his stint as Harvard president. I am sure Renaud Laplanche and the rest of the board are fully aware what they are getting into by bringing him on board.

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Mike December 13, 2012 at 5:12 pm

How about another contest, Peter? Instead of guessing when LC will reach their second billion in loan originations, how about we take a stab at when he’ll ‘resign’?

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Peter Renton December 13, 2012 at 6:03 pm

Ha! That might be a while. I imagine Summers will stick it out at least until the IPO.

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Fred December 13, 2012 at 9:43 pm

For me, there are 2 kinds of Treasury Secretaries: those from the for-profit industry (Paulson, O’Neill, Rubin) and those from the not-for-profit research / academia world (Geithner, Summers).

Considering Mack as coming from the industry, it makes sense for LC to get one board member from the academia.

My first impression on hearing the news about Summers joining LC was very positive. It was as if LC gains another merit & legitimacy among big financial institutions (JP Morgan, Bank of America, Wells Fargo, etc.).

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Peter Renton December 14, 2012 at 4:05 pm

Fred, This is the main reason for the move in my opinion. While his advice in board meetings may be valued what is far more important is just having him there. Yesterday, there was more news about Lending Club than any other day since I began covering this industry more than 2 years ago. Dozens of articles on major websites around the internet – all because of the kind of profile Larry Summers has.

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Dennis Nash December 20, 2012 at 6:40 am

On the record,
This is a really great thing for Lending Club. Of course, not everyone is going to agree but in all honesty, look at the stock market today. Look at the Mutual Fund industry as well as ETF’s.
“Ben” has to realize that yes Lending club is hiring indiviuals from Wall Street but for other reasons. Lending club needs all the backup it can get because LC is indeed getting bigger with bigger return results. No, there is no conspiracy theory here. I can’t state who I work for but yes, I’m in the Financial industry myself and I can tell you from what I see….billions of dollars are leaving Wall Street and going into P2P lending. People want great returns. LC gives them that. That’s why I’ve invested with LC for three years and so far I’ve got more $$$$ from it then stocks, Mutual Funds then I could imagine. I have no intention of turning back.
LC knew what they were doing when they took Larry Summers into the board. They know that they will need to make LC grow and need to expand for the days ahead.
Watch and wait.

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Peter Renton December 20, 2012 at 2:28 pm

Well said Dennis. LC is going to become a major part of the financial landscape and they need people who understand big financial institutions. Like him or hate him, and Larry Summers is pretty easy to dislike, he does understand big finance.

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