Just two lending platforms survived the SEC’s entry right into a formerly lightly-regulated market.

Just two lending platforms survived the SEC’s entry right into a formerly lightly-regulated market.

Introductory Note

In 2008, the Securities and Exchange Commission made waves by determining to manage the nascent lending industry that is peer-to-peer. Just two lending platforms survived the SEC’s entry as a formerly lightly-regulated market. The SEC would regulate the lending-investing process https://personalbadcreditloans.net/reviews/loan-by-phone-review/, while other agencies like the Consumer Financial Protection Bureau and Federal Trade Commission would regulate the borrower side of the business under this regulatory setup. In subsequent years, business owners, academics, and lawmakers struggled utilizing the concern of whether this bifurcated approach should be changed by a consolidated regulatory approach, sustained by an exemption of P2P financing platforms from federal securities rules. This informative article argues that the present bifurcated system works and it is constantly improving once the SEC amends existing exemptions and introduces new laws to smooth the trail for monetary innovation. It utilizes information and empirical techniques to examine that is further general welfare of borrowers and retail lenders in P2P deals. It concludes that (i) unlike brick-and-mortar deals, retail loan providers need more security than borrowers within the P2P world and (ii) the SEC is uniquely appropriate to safeguard these retail lenders and really should continue to do therefore, with some suggested alterations.

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