Banks Push Pause On Lending Club Deals

The fallout from Lending Club’s admissions of improper loan sales earlier this week might come in the form of chilly reception for the firm’s investment and loan sales, The Wall Street Journal stated on Tuesday (May 10).

Goldman Sachs and Jefferies LLC have gone cold turkey in buying Lending Club’s loans, just after the firm’s CEO, Renaud Laplanche, resigned. WSJ noted that, with the departure of these two banks, securitization activities may fall by the wayside. That abandonment, should it happen, could spread to other firms. The investor pool must be diverse enough to broaden outreach. But, as WSJ noted, Lending Club’s first quarter loan volume subsequently bought by funds slipped to 32 percent, off from 45 percent. Those numbers come against a backdrop where a relatively benign credit environment may be tempered by fears over rates or company-specific concerns.

Jefferies had looked to set up $150 million in Lending Club borrowings to be sold to other investors. Goldman itself, according to WSJ, had yet to set a date for a securitization deal for the firm.

Other issues that may impact securitization, as WSJ stated, include the fact that the resignations of Laplanche and peers may bottleneck loan sales. WSJ noted that the securitizations might see rocky completion but that the company would be reaching out to investors with frequency.