Online lenders Begin Feeling the Stress

Online lenders are feeling the pressure from borrowers and investors alike; consumers are starting to lose their jobs and companies are seeing revenues evaporate; investors who buy the loans from platforms has started to cut off capital as they cannot accurately asses the risk of loan pools; “The reckoning, which I thought would come sooner, has taken some time but now unfortunately is here,” said Todd Baker, a Senior Fellow at Columbia University’s Richman Center and frequent critic of so-called marketplace lenders, to the FT;  some lenders might have to hold loans on their balance sheet or incentivize investors with higher returns; rating agencies have released notices about rising delinquencies but the stimulus could help to ease some of the pain; Kroll Bond Rating Agency wrote last week, “the passage of the $2tn federal stimulus package on March 27, as well as borrower tax refunds and servicer relief programs, should help to soften the blow.” Financial Times

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