I first wrote about the GAO report on p2p lending last year. The GAO have been doing an analysis of the federal regulatory environment concerning p2p lending and would make recommendations to Congress on how to regulate this growing industry going forward. The report was released yesterday, two weeks early.
The full report is 78 pages long and while I haven’t read every word yet I have skimmed the report and to tell you the truth I am a bit disappointed. The upshot of their report is that they say it is difficult to know what the best regulatory environment will be because the industry is so dynamic and growing rapidly.
However, the report did identify two options for regulating p2p lending:
We identified two primary options for regulating person-to-person lending that differ primarily in their approach to lender protection: (1) continuing with the current bifurcated federal system—that is, protecting lenders through securities regulators and borrowers primarily through financial services regulators, which will include the newly formed CFPB—or (2) consolidating borrower and lender protection under a single federal regulator, such as CFPB.
So they are basically saying we can keep the status quo or move to a single federal regulator such as the CFPB. But the report does not make a recommendation as to which regulatory system would be best. Knowing how governments work I would be surprised if we see any change to the regulatory environment in the near future.