Yesterday, I attended the second annual Online Lending Policy Summit in Washington DC. It was headlined by the Acting head of the OCC, Keith Noreika, Congressman Greg Meeks (D-NY), Congressman Tom Emmer (R-MN) and William Isaac, the former head of the FDIC.
The event was opened by Cornelius Hurley, Executive Director of the Online Lending Policy Institute (OLPI). He then introduced the first speaker, Phil Goldfeder, head of Government Affairs at Cross River Bank, who laid out an overview of where we are today with online lending. Following that we had a panel focused on the Madden issue. There was a long discussion about the impact that this decision has had on borrowers in Second Circuit states: NY, VT and CT. Research has been done by Columbia University and others that show lending is down significantly in the three states and one panelist noted that “no marketplace lending platform is issuing loans in these states to borrowers under a 625 FICO.” If for some reason the Madden decision was to be expanded to all states then lending platform volume could drop as much as 50%. But there was some optimism that a legislative fix would be successful here.
William Isaac was the head of the FDIC under President Reagan and he painted a stark picture of the US today where 60% of the population cannot get a bank loan. He said that we have to do better and figure out a way to lend to a broader cross section of the population.
Acting Comptroller of the Currency, Keith Noreika, struck a surprising upbeat tone in his remarks. He began his speech by saying that online lending was a natural evolution of banking. This caught the attention of American Banker as well as everyone in the audience. He also cautioned that one of the problems with the industry today was a lack of profitability and the fact that the loan books have not been tested in a downturn. These are concerns we have all heard before. Not surprisingly he argued that online lending platforms should consider directly entering the banking industry. But what was interesting was that he did not mention the OCC fintech charter, instead pointing out other the various other types of banking charters that might be suitable for fintech companies.