The US Treasury Department have started to investigate online marketplace lenders and whether the regulations that are in place can be effectively applied to modern technology.
This was declared in a statement published this week. “The US Treasury Department announced today that it will seek public input on the growing online marketplace lending industry,” it said. At the moment, officials are more focused on finding out how marketplace lenders operate, rather than create new regulations.
Online lending started with the premise of peer-to-peer lending, where money is transferred through a website to others and a large amount of investment into this sector has come from investors that are prepared to give millions of dollars to the marketplace, according to The New York Times.
The New York Times also explains how online lenders have occupied the space that banks have opened up, as the more traditional financial institutions have become hesitant about giving loans to businesses and customers. This is because online lenders are offering an easier and cheaper solution, financed by investments by hedge funds and other institutions and provide valuable credit to parts of the economy that are underserved.
Antonio Weiss, a senior Treasury official wrote in a blog post on the US Treasury Department’s website that this industry is ever growing. “While still a small component of the total consumer and small business lending market, it is a rapidly developing and fast-growing sector that is changing the way consumers and small businesses secure credit,” Weiss said.
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