Following its request for input (RFI) on the rapidly-changing role of online marketplace lending the Treasury Department has now laid out is policy views on a sector that not only experienced the striking growth that precipitated the RFI, but has now also recently demonstrated problems that may be either growing pains or more fundamental indications of the challenges of transferring traditional financial-intermediation activities to less-regulated providers. Regardless, Treasury views the sector with considerable concern and recommends a series of actions to address borrower, investor, and financial-market risks. These recommendations in part depend on voluntary action (uncertain), inter-governmental cooperation (often lacking), and statutory change (improbable in the near term). However, current law gives bank regulators and the CFPB considerable direct and indirect authority over online marketplace lenders they are likely now to deploy with significant cost to most non-bank providers.

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