Cleveland Fed Removes Report on Marketplace Lending to Clarify
A report by the Federal Reserve Bank of Cleveland that slammed the peer-to-peer lending industry has been taken offline for clarification after researchers received inquiries about their methodology.
The authors of the Nov. 9 report “have received several questions about the composition of the underlying data set they used in their analysis,” the Cleveland Fed said on its website. They are “revising their paper to further clarify the data sample they used” and will post the new version as soon as it’s ready, the regulator said.
The study called for more regulation of the industry.
“P2P loans resemble predatory loans in terms of the segment of the consumer market they serve and their impact on consumers’ finances,” the authors wrote. Such loans became more popular in the wake of the financial crisis, when more traditional types of lending dried up. Online marketplaces match borrowers with investors and shorten the approval process.
Most of the criticism focuses on the source of the Fed’s information as the data in the original report include both peer-to-peer loans and more traditional loans.
“The report created significant confusion since there is a large body of analysis, including from other regulators, that directly contradict the Cleveland Fed findings,” Ram Ahluwalia, CEO of PeerIQ, a provider of data and analytics for the consumer lending sector, said in an interview. “The lending industry needs to invest more in transparency and standards to create confidence with investors and regulators.”
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