Lending Club is building a two-sided marketplace, which is always hard. I've been lending on the platform for almost 3 years now. It was always difficult for me to find loans that met my criteria. Borrowers have 14 days to get their loans funded by lenders and loans were typically funded by lenders within 1 day. So lenders were outnumbering borrowers.
Starting in January this year, however, loans started taking longer and longer to fund. Recently, I've seen them timing out. This means that in the marketplace, the balance shifted and borrowers outnumbered lenders. Another indication that Lending Club was experiencing a shortage of lenders: they began offering bonuses up to $2,000 for new accounts.
Finally, this earnings release indicates that loan originations, while still growing, has slowed considerably. That is the formal evidence confirming a significant slowdown in new lenders.
I suspect that there was a lot of pressure internally for sales personnel to bring in new capital through either retail of commercial lenders (they've served both markets for quite a while), and, someone or some group got too aggressive. Whether LaPlanche knew and ok'd the deal, or whether he was just 'person in charge' and has to take the fall, I don't know. But this will be a major wound. It's really sad that it is self-inflicted.
Starting in January this year, however, loans started taking longer and longer to fund. Recently, I've seen them timing out. This means that in the marketplace, the balance shifted and borrowers outnumbered lenders. Another indication that Lending Club was experiencing a shortage of lenders: they began offering bonuses up to $2,000 for new accounts.
Finally, this earnings release indicates that loan originations, while still growing, has slowed considerably. That is the formal evidence confirming a significant slowdown in new lenders.
I suspect that there was a lot of pressure internally for sales personnel to bring in new capital through either retail of commercial lenders (they've served both markets for quite a while), and, someone or some group got too aggressive. Whether LaPlanche knew and ok'd the deal, or whether he was just 'person in charge' and has to take the fall, I don't know. But this will be a major wound. It's really sad that it is self-inflicted.