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Comment by manav | Hacker News Reader

This isn't surprising. The entire personal loan/payday loan industry is terribly corrupt. This only comes a few days after Google banned ads for payday loan companies.

I think regulation is coming soon to the alternative-loan industry as a whole. In regards to the LendingClub specifically, I can't speak for much since the details in the article are lacking, but it appears that there was some kind of falsification or "data errors" on securitized loans sold to banks or third parties. Based on how they are structured, I would guess that an investors audit of loans originated by Lending Club came up with some inconsistencies that didn't meet the purchase guidelines, triggering Lending Club to have to buy back the entirety of the security.

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Comparing LendingClub to a payday loan is dishonest. A Pay day loan company charges interest that amounts to an APR of 100%+ [0]. LendingClub's rates range from 5% - 30% [1] and the overwhelming majority of the loans they issue are on the lower end of that scale. Credit cards charge interest rates of 12% - 30% for comparison.

Here is a better article about the issue that caused the resignation of the CEO.

http://www.bloomberg.com/news/articles/2016-05-10/jefferies-...

The specific information that was changed on the loans in question was the application date. It had nothing to do with credit quality, or rates to consumers. The reason they changed the dates was because the bank they were selling them to wanted different wording of the legal language in the loan application document and they asked that the language be changed. LendingClub employees changed the application date on some loans to make it appear as though the customers had applied for the loan after that legal language change happened when in fact they had agreed to only the old terms.

It's not honest for sure and shouldn't have been done but at the same time it was caught and corrected and isn't the end of the world. A lot of the negativity narrative is coming from hedge funds who have piled into short positions in LC stock.

[0] http://www.consumerfinance.gov/askcfpb/1567/what-payday-loan...

[1] https://www.lendingclub.com/public/rates-and-fees.action

Do you have references for that last claim?

One of the main places that LendingClub loan investors discuss the company is in a forum hosted by the site LendAcademy[0] Starting in January of this year someone claiming to be from a hedge fund was in the forum saying they had shorted the stock and trying to convince everyone the company was garbage and generally causing a ruckus[1]. After the news about the CEO resigning broke last week another hedge fund guy went on Bloomberg to trash LC. [2]

[0] http://www.lendacademy.com/forum/index.php [1] http://www.lendacademy.com/forum/index.php?topic=3606.0 [2] http://www.bloomberg.com/news/articles/2016-05-12/jim-chanos...

The Google ads ban does not affect players like LendingClub/SoFi/Avant since they are long term loans with interest rates similar to credit cards.

True, I grouped them together since they are both semi unregulated alternative lenders. Google also had a stake/partnership with LendingClub.

Can you cite that claim of Google has a stake/partnership with LendingClub?

Google Buys Stake in LendingClub Startup Valued at $1.55 Billion (2013) http://www.bloomberg.com/news/articles/2013-05-02/google-buy...

Google in peer-to-peer lending venture (2015) http://www.ft.com/cms/s/0/fe0e1ca4-9cc3-11e4-a730-00144feabd...

A Google search for 'google stake LendingClub' will reveal more.

Are you too lazy to use the Google?

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